Fred Wang, founder of Mars Finance, is a serialentrepreneur. Before Mars Finance, Fred has successfully established a gamingcompany that listed in HK — Linekong Group(HK.8267).

Fredis also an investorand founder of Consensus Lab, the founding partner of Geek Founders

Capital，and the former SVP of Kingsoft Software. In 1997, Fred Wang was workingwith Jun Lei, who was the CEO of Kingsoft at that time, and later foundedXiaomi. Lei rapidly promoted Fred as the Senior VP of Kingsoft Software Group.Fred was in charge of desktop software tools, network security products andonline game products in Kingsoft Software Group.

In 2007, Fred Wang leftKingsoft Software Group and founded LineKong with his former colleagueMingxiang Liao. IDG invested in the company in the same year. The business ofLineKong included the development of online games products, online gamesdistribution, and the production of internet video content. LineKong was listedon Hong Kong Exchanges in 2014.

In 2012, along with thesupport of Andrew Y. Yan, the managing Partner of SAIF and Kai-Fu Lee, theChairman and CEO of Sinovation Ventures, Fred Wang co-founded Geek FoundersCapital with the founder of CSDN Tao Jiang. Up to now, Geek Founders Capitalhas invested in more than 100 startups in mobile and Internet industry.Early2018, Fred founded Mars Finance, a blockchain industry information serviceplatform. He also hosted a dialogue show named ’10 Questions with Fred Wang’,which became a phenomenon in China’s blockchain space.Fred has a positivepersonality and is forthright in his opinions. Fred Wang has been active in theera of application software, the Internet, as well as the blockchain.

Vitalik Buterin, is a Russian-Canadian programmer andwriter primarily known as a co-founder of Ethereum and as a co-founderof Bitcoin Magazine. Buterin was born in Russia. He attendedthe University of Waterloo in 2013 but dropped out in 2014.

On January 23, 2014, heproposed a brand new concept called Ethereum in the paper of ‘Ethereum: ANext-Generation Cryptocurrency and Decentralized Application Platform’ on his publicationof Bitcoin Magazine.In July 2015, Buterin officially launched Ethereum. As ofJune 21, 2018, the market value of Ethereum was approximately USD 53.6 billion.After Bitcoin, Ethereum currently is the second-largest cryptocurrency. Buterinwon the ‘Thiel Fellowship Award ‘in 2014 and the ‘Fortune 40 under 40 list ‘in2016.

The following is the complete dialogue:

Fred Wang:Hello my friends!! this is the moment i feel so proud, I’d like to give you my heart-felt “thank-you”, to make this happen,and to give me so many inspirations, to name a few, Patrick Chu of Qtum, JiangTao of CSDN, Xu Zhihong, and the list is long! I’d also like to thank mywonderful team to stick with me, and work around the clock to make things somuch better.This is an exciting moment, not only for me, as founder of Mars Finance,but also for the Mars family, to have Vitalik and all of you here. I’d like to give you myheart-felt “thank-you”, to make this happen, and to give me so manyinspirations, to name a few, Patrick Chu of Qtum, Jiang Tao of CSDN, XuZhihong, and the list is long! I’d also like to thank my wonderful team tostick with me, and work around the clock to make things so much better. Ihope you will enjoy the 10-Q session, as much as I do.

Before I fire up thequestions – let me share with you some of my thoughts first. Ethereum, triggering the global prosperity of thecryptocurrency market, brings a new era of smart contracts. I think thatEthereum has created an‘evolution’world. The global cryptocurrency market value has risen from $18 billion inearly 2017 to nearly $560 billion. Today, 94% of the top 100 cryptocurrenciesin market capitalization are built on Ethereum blockchain; 87% of the top 800cryptocurrencies in market capitalization are built on Ethereum blockchain. It reminds me of the movie of ‘Avatar’. Iremember that people were shocked by the unbelievable beauty of Planet Pandora.Meanwhile, people also felt uneasy and fearful. Today, we are happy to invite the creator of the Ethereum‘evolution’ world——Vitalik Buterin. I believe that the change of cryptocurrencymarket in the past years has vastly exceeded his expectations. In fact, Vitalik Buterin is quite modest andmysterious. He doesn’t like to be interviewed frequently. Therefore, I wouldlike to say thanks to him for accepting my interview. I hope that VitalikButerin will make a difference today.

Question 1

Fred Wang:On June 15th, you mentioned at the Ethereum Core Devs conference that thedevelopment team behind Ethereum was considering possible changes to a plannedrollout of new technology upgrades. The idea is that the team might seek toalter the sequence in which Casper and sharding, perhaps its twomost-anticipated updates, are activated. Casper,different from other POS mechanisms, is a new POS mechanism that has beenbrewing for a long time in Ethereum. By implementing the Casper protocol,Ethereum is able to quickly punish a node’s malicious behavior. Sharding is ascale technology based on the traditional concept of database sharding. In my opinion, you are likely to activate Ethereum’s biggest upgradesunder a combined protocol. But, just as a coin has two sides, the new designmight enhance the scalability of Ethereum.

Vitalik Buterin:at an event at Cornell university, It’snot an alteration of the sequence, it’s an alteration of the strategy.

Fred Wang:May I kindly know when the idea the Casper mechanism design came to yourmind? What inspired you to create such a mechanism?

Vitalik Buterin:The original plan was to create Casper as a smart contract on ethereum,to make the design as easy to build as possible, and at the same time continueworking on sharding. However, at this point we have made enough progress onfull proof of stake and sharding that continuing along that roadmap would leadto a worse product and a lot of wasted effort. We would have to build the firstversion of Casper and almost immediately throw it out. Thenew roadmap is still “Casper then sharding”, but the first version ofCasper is modified so that it is “along the way” to a full Casper andsharding implementation.There are other benefits; for example, we are looking at using BLSaggregation in the short term, and STARKs in the long term, for signatureaggregation, which is an optimization that allows the Casper mechanism toprocess many more validators, which is what allows us to reduce the minimumvalidator size from 1500 ETH to 32 ETH. Thecore idea behind Casper is to combine together chain-based proof of stake withideas from traditional Byzantine fault tolerance (BFT) research, like Lamport,Paxos, PBFT, etc. Many asked us, why not just use those traditional algorithmsdirectly? However, we believed that those algorithms are both too complicatedand not well suited to the format and needs of a blockchain, and so we studiedthe algorithms and created a version that we believe is simpler and more suitedfor a blockchain context.

The data availabilityissue ( see :

https://github.com/ethereum/research/wiki/A-note-on-data-availability-and-erasure-coding) is one of the more challenging problems in sharding, and one that I find manyother projects, especially those with a cryptographic mindset, tend not to takeseriously enough.

Fred Wang:We are familiar with the early POW and POS mechanisms; but could youplease kindly explain the working principle of the Casper mechanism in a simpleway once again?

Vitalik Buterin:The challenge is, that it is not enough to just verify that theblockchain is valid, one must also verify that all of the data in the blockchainis available in the p2p network, and anyone can download any piece of the dataif they want to. Otherwise, even if the blockchain is valid, publishing blocksthat are unavailable can still be used as an attack that prevents other usersfrom taking money out of their accounts, by denying them the ability to updatetheir cryptographic witnesses.We have solutions, though they are somewhat complex; they essentiallyinvolve encoding the data redundantly and allowing users to randomly sample tocheck that most of it is online; if you can verify that most of it is online,you can use the redundancy to recover the rest of the data. Randomly distributed throughout the p2p network. Thebasic idea behind the current Casper implementation is that users can send 32ETH into a smart contract, and then once they are included in the blockchainthey are added to the current validator set. Every block is created by a randommember of the current validator set, and every 100 blocks the entire validatorset needs to send a message “finalizing” some checkpoint. Filecoin is somewhat similar, but not quite the same. In Ethereum’s case, there is this requirement that the blockchain mustensure that absolutely 100% of the data is valid and available; in Filecoin’scase it’s ok if one or two files drop off. Iactually think our approaches evolved separately.

Fred Wang:When it comes to Casper, I consulted a public blockchain designer. Hesaid, why would they design Casper to prevent small miners’ verification rightsin the Ethereum ecosystem by using the safe deposit? Currently, if you are anindependent miner of BTC or ETH, you still have a chance to mine a block.However, under Casper’s design principle, small miners will not be able toverify a block. Does this mean that Casper may bring an uneven playing fieldand create more privileged nodes?

Vitalik Buterin:However, under Casper’s design principle, small miners will not be ableto verify a block.I would say not true anymore. First of all, 32 ETH is ~100,000 CNY; I don’tthink it’s practical to be a PoW miner with less than that in any case, sincePoW mining requires economies of scale. And even with less than that amount,you can always join a pool.

Kevin_Xu:is there any restriction to becomevalidator? an extreme case:the rich people can easily have majority validators to control the shard evenwith random sampling. there must have critical security issues.

Vitalik Buterin:We expect there to be around 10,000,000 ETH staking in total, so takingover an entire shard requires at least ~40% of that, so it is very expensive.There are also ways to recover from attacks even in such cases.

Question 2

Fred Wang:Many people in the blockchain industry believe that 2018 will be a keyyear for blockchain applications. At the ‘2018 Conference on EthereumTechnology and Applications’, you mentioned that blockchain technology will beused in the financial industry firstly, and then in the gaming industry,identity authentication, value chain, and other industries will try thisemerging technology.2018 is half way over, so why haven’t we seen blockchain applicationswidely adopted? What do you think are the most important factors preventinglarge-scale applications of blockchain?

Vitalik Buterin:Yes, I think that the financial industry and gaming are naturally thefirst two. In the financial case, the reason is that financial technology isgenerally harder to use and very “behind the times” compared to otherforms of digital technology. Why can’t I send money halfway across the world aseasily as sending an email? I know within China sending money is fairlyefficient, but in many places there are still no widely adopted good ways tojust send money from one person to another online, and sending money acrossborders is hard everywhere. Gaming is a case where there are many companiesinterested in creating markets for in-game assets and this is an area that manypeople seem to be interested in.

Going beyond that, Ithink the main thing that blockchains can provide in other industries in theshort term is interoperability. There are benefits from having a commonplatform where all providers of some service can interoperate with each other,so that users of one can more easily interact with users of another, but thereare also very large benefits to being able to doing this without creating acentralized monopoly. There are examples of this in finance (eg. what OmiseGOis doing, also AMIS in taiwan), and I expect to see similar concepts in otherindustries as well.

The main challenge withgetting blockchain tech adopted in other industries is that the existing levelof inefficiency is lower, and so it’s more difficult to convince people toaccept the inconveniences of current public blockchains like long confirmationtimes and high transaction fees. The technology is still being developed, and Iexpect a few years from now, the state of blockchain scalability will be muchbetter, we will have good techniques to do efficient transactions, and betterprivacy solutions, and we will see more adoption. Ipersonally think pure PoS is enough; adding more components just makes it moredifficult to analyze.

Fred Wang:Yup, In some people’s point of view, there are only a few applicationscenarios for blockchain, such as cryptocurrency exchanges and ICOs. To behonest, many DAPPs don’t have very good design or practical usage. Would youlike to give any advice to the developers in the Ethereum ecosystem?

Vitalik Buterin:I need to write this up in more detail; basically a mechanism called aminority soft fork, where users that are not part of an attacking majoritycollectively create a fork that ignores the attacker. Ithink state channels will do a lot in the short term to make dapps with betteruser experience and scalability simpler to build; Jeff Coleman from L4 andothers have been doing a lot recently to make state channel tech morestandardized and easier to use. They recently published a state channels paper(http://counterfactual.com/statechannels). Plasma will help with scalability,and I think Plasma could be particularly helpful for enterprise use cases, asit allows applications to be built in a half centralized half decentralizedway, where they can benefit from the blockchain’s safety but still get theefficiency of a centralized system. Also, developers should learn more about Vyper:http://vyper.online. It’s a relatively new smart contract language with easierto read python-like syntax and more safety features. There was recently a betarelease: https://github.com/ethereum/vyper/releases/tag/v0.1.0-beta.1.I have beentold that people in China like python, so maybe they will find Vyper pleasantto code in.I know there are teams working on chain interoperability, though I am notpersonally very close to them.

Fred Wang:follow up, let us open our minds and envision the future, does the ideaever cross your mind that smart contracts might be the wrong direction for thedevelopment of blockchains? Haha, I cannot believe I am asking you thisquestion at this point.

Vitalik Buterin:I think many people misunderstand smart contracts. There is an impressionthat smart contracts are for doing things like “I pay you 10 ETH to builda website, so I put the 10 ETH into a smart contract. The smart contractdetects if you built the website, and automatically pays the 10 ETH if itdetects that the website is finished”. Theproblem with this approach is of course that verification is too difficult; apiece of smart contract code by itself cannot tell if something is a website. The right way to think about smart contracts is as economic mechanisms;they do not do everything by themselves, rather they set rules by whichdifferent parties can interact with each other, and some of those parties canbe arbitrators, or potentially you can use game theory to create smartcontracts that create good incentives even without any arbitrators. Forexample, there is an idea called 2-of-2 escrow, where if there is a disputeboth people’s money gets burned. This seems harsh, but it does create a strongincentive for both parties to act honestly, even in the absence of anarbitrator to determine who in a dispute was right or wrong.

Even state channels andPlasma both depend on sophisticated smart contract logic to implement themechanisms. A pure “payment-focused” design such as Bitcoin has ahard time implementing such constructions; it cannot do Plasma, and it can onlydo state channels in a more limited and complicated way compared to richersystems like ethereum.

One challenge that I seewith that model is that if you create a general-purpose system, then because ofTuring completeness you know that the system will still be general purpose in20 years, and so still usable in 20 years. If you create a special-purposesystem for some industry, on the other hand, the needs of that industry changerapidly, and so the specification of the protocol would need to change everyfew years, forever. This is not very good for a base layer public chain,because it puts a lot of load on the governance mechanism to keep agreeing onnew protocol rules, which leads to centralization. However, I *do* thinkindustry-specific Plasma chains have potential.

Luan Dr. Nguyen: can you elaborate the plasma for enterprise solution?

Vitalik Buterin:Basically, an enterprise entity (or potentially even government, eg.

central bank) can create a plasma contract(specifically, Plasma Cash:https://ethresear.ch/t/plasma-cash-plasma-with-much-less-per-user-data-checking/1298),and they can operate their centralized service (eg. a currency system, anexchange) as a Plasma chain. They only need to publish one transaction to thepublic blockchain perhaps every minute, and an unlimited number of transactionscan happen on the server side, fairly similarly to the traditional centralizedway. But the server also sends each user Merkle proofs which allow them toverify their own history, and if the server ever goes down or gets hacked, theusers will be able to tell, and the Plasma contract will guarantee that theywill be able to move their assets into an Ethereum-based ERC20, and possiblymigrate to a different Plasma chain. I’m already talking to a group in Russiathat’s interested in using this approach.

Question 3

Fred Wang:At 2:11 AM on June 15, the Mainnet of EOS was successfully launched. EOShopes to solve the problems of latency and data throughput by using parallelchain and DPOS. From the perspective of performance, it seems that EOS has”surpassed” Bitcoin and Ethereum. I notice that. I read the EOS whitepaper and found that BM (Dan Larimer) defined EOS as‘Blockchain 3.0’. It is interesting to see that many people in the blockchainindustry have the following idea：

BTC = Blockchain 1.0;ETH = Blockchain 2.0;EOS =Blockchain 3.0

Do you agree with it?What is Blockchain 3.0 in your perspective? Have you followed the EOS technicalmetrics?

Vitalik Buterin:From the perspective of performance, the Cray supercomputer probablysurpassed Bitcoin and Ethereum in 1976. Idon’t really like talking in terms of 1.0, 2.0, 3.0 these days, but if there issuch a thing as blockchain 3.0 then scalability is definitely a big part of it.I know that EOS’s performance is higher than that of bitcoin and ethereum but Ibelieve not too much harder; I recall hearing a few hundred TPS on some recenttestnet. Ultimately, I do strongly believe that achieving the kind ofscalability that is needed for large-scale applications needs much more thanjust throwing more computing power at the problem; it requires fundamentallynew approaches and a lot of thinking to implement them. This is why I think thework on state channels, plasma and sharding is so valuable. EOS is definitely an interesting experiment, one that is trying to dothings very differently from ethereum and other platforms. It’s not just atechnical experiment; it’s also a political science experiment, as they areattempting to create a kind of digital government in cyberspace on theirblockchain, with a constitution, an executive branch (the 21 delegate nodes), ajudicial branch (arbitrators), etc, and it is a very explicit part of theirphilosophy that “code is not law” and this digital government isexpected to very actively solve people’s problems. Thatsaid, this kind of approach is risky, and so I expect there to be manyapplications that find it too risky and are interested in blockchains preciselybecause they want a platform that is safer and more difficult to change. EOSalready froze 7 accounts, and very quickly without warning; this can certainlyhelp people recover from theft and scams, but it poses challenges. What happenswhen you try to build an application on EOS, which the EOS establishment doesnot like? EOS itself was able to run its ICO and its token on the Ethereumblockchain, and we had no power to stop it; do you think that the EOSarbitrators will be similarly friendly to an EOS competitor running an ICO andissuing a token on EOS? Are you *sure*?

I think that onecomponent that needs to be built that can make smart contracts work better isoracles, for providing information to smart contracts about the outside world.I know that Oraclize has been working on centralized oracles for a long time,though I am also interested in the decentralized oracle projects. Augur has abuilt-in decentralized oracle for determining the “true” result ofsome event, and there is a project called Reality Check run by Edmund Edgar inJapan that is trying to do something similar. I think this will be veryvaluable to making smart contracts work well when it goes live.

Fred Wang:Then, the first 21 EOS Block Producers (BPs) have been elected along withthe EOS Mainnet launch. But it seems that you are not optimistic about it. Asyou said, the 21 Block Producers are not 21 independent entities, and there maybe inherent connections between the nodes. Naturally, the network may becontrolled by BP monopolies.

In order to respond toyour question, BM released an article called‘The Limits of Crypto-economicGovernance’to explain the original intention and purpose of the DPOS electionmechanism.

BM thinks that you arecommitted to find a ‘black box’ for thecrypto-economy, which assumes that it cannot rely on equity (chaebolism) orindividuals (democratic politics) to vote. But he believes that human nature isgood. The main differences between you and BM seem to lie on the basicassumptions. Would you like to respond to BM’s remarks right here right now?

BM releasedan article called ‘The Limits of Crypto-economic Governance’

Vitalik Buterin:I think my philosophy is that we want base-layer blockchains to workunder as wide a range of situations as possible, and it really is difficult topredict what kind of interests and values coin holders will have in the future.The reason why economic incentives are so useful is that they are a kind oflowest common denominator; no matter whether someone is rich or poor, anindividual or a corporation or a robot, American or Chinese or North Korean, weknow that offering incentives to them can affect their behavior and drive themto act in some way. That said, economic incentives make much less sense inenvironments where we have close relationships with each other and know eachother well, and in those cases relying on goodwill can generally work muchbetter. Ethereum is a base-layer blockchain platform for the world, so itcannot make assumptions about who is participating in it or who is running theproof of stake validator nodes. Applications on top of Ethereum, on the otherhand, can in many cases make more assumptions and rely on approaches that aremore social than economic. I think there is definitely room for decentralizedplatforms that look more like “platforms for a community” than”platforms for the world”, though it remains to be seen whether thosekinds of platforms are best built as independent platforms, or as layer 2plasma chains on top of public blockchains like ethereum. If a base layer blockchain runs on code, you can build layer-2 systems ontop of it that bring humans back in. If a base layer blockchain includes roomfor high levels of human intervention, it is much more difficult for layer-2systems on top of that to take those humans out.

Regarding popularizingEthereum, I think that now is not the time to go out to the entire world andsay “Ethereum is great, you should all get into it now”, becausethere is still little to get into. The only thing that an average person canreally do at present is buy and trade crypto tokens, and I think that’s thewrong thing to focus on. What is important now is to build the technology so iteventually *can* handle a larger volume of users, and to try to makeconnections with communities that can help us achieve those goals. This is whywe have made a lot of connections with academic cryptographers, and are nowreaching out to the economics and mechanism design community. Recently, therehave been more and more economists starting to talk about blockchains a lot,including Glen Weyl, some authors from Marginal Revolution, and more; I thinkit’s very good to get ideas from them about where blockchains can provide valueto society.

Fred Wang:I agree in principle.At present, any action on the Ethereum blockchainneeds to burn a certain amount of ether in GAS fees, including simpletransactions, smart contracts, and even ICOs. However, with the increasingnumber of new Ethereum projects, the network usage costs are progressively. GASfees have become an unavoidable cost for developers and smart contractcreators. Some people think that GAS fees are the‘stumbling block ‘ inEthereum, and are killing many projects.

Do you think GAS feeswill affect the future development of Ethereum? Do you and your team have asolution? In contrast, transaction fees on the EOS blockchain are basicallyfree. Have you ever worried about some DApps leaving for the EOS blockchain?

Vitalik Buterin:Transaction fees in EOS being free is a misconception. Transaction feesare not free; rather, instead of paying transaction fees directly, you have topay transaction fees indirectly, by holding EOS tokens instead of holdingwhatever other tokens you wanted to hold. I wrote a long post here about why Ithink this is a bad idea, and will likely eventually simply lead to a morecomplicated version of a fee market:

https://ethresear.ch/t/against-replacing-transaction-fees-with-deposits/940. I think that ultimately the only way to make fees less of an issue is tosolve scalability, so that supply can catch up to demand, and we are veryactively working on that with state channels, plasma and sharding. CryptoKitties and games definitely help drive interest and adoption, andI think at this point the interest in the gaming industry is clear; I hope thatwe can also start moving beyond just gaming fairly soon.

Question 4

Fred Wang:On June 14, William Hinman, the director of the Finance Department of TheU.S. Securities and Exchange Commission (SEC), said that Ethereum (Ether)is not a security. Affected by this news, the price of Ethereum rose 8% to $520on that day.Actually, the SEC had already issued a statement on cryptocurrencyregulation in 2013. Currently, cryptocurrencies have been regulated by the U.S.Commodity Futures Trading Commission as‘goods’. But the U.S. Securitiesand Exchange Commission thinks that cryptocurrencies should be regulatedas‘securities’.In your opinion, is it possible that the regulation policy will impactthe future development of Ethereum? Did you consider this issue when youstarted to develop Ethereum?

Vitalik Buterin:We definitely considered the securities law issues in early 2014; weconsulted with multiple law firms and were careful to confirm that what we weredoing was compliant with the laws at the time. We’re happy to see the SECrecognizing that not all crypto tokens are securities. I think that from hereon, regulation policy absolutely will continue to impact the progress ofblockchain technology, though primarily from the point of view of applications.I think in general governments have figured out that shutting down publicblockchain networks is extremely difficult, but regulating their links to theoutside world, like exchanges, is substantially easier.

That said, I think it isdifficult to predict the progress of regulation, because much of it will dependon how blockchains are used in practice. Finance was only the firstapplication, there will be many others, each with their own challenges. I think incentivized mesh networking and paid wifi access hotspots arecertainly something that would be very interesting to work on. There are toomany people today who don’t have access to an internet connection despiteworking internet connections locked by passwords being all around them; I thinkthere’s a large unmet need for some solution to this, and I also think thereare large potential humanitarian impacts from incentivized mesh networking thatare being overlooked, for example providing internet access in war zones. I’m not necessarily expecting the *existing financial industry* to useblockchain technologies, though many are trying. I am looking more at newprojects, and direct peer-to-peer interaction. I dohope that Hinman’s comments will encourage other blockchains to be moredecentralized.

Fred Wang:Understand, according to your tweet, digital currency is still a newasset class with extremely high volatility. The price of digital is likely tofall to near zero. You also suggested that investing in traditional assets likestocks and real estate may be the safest option. How do you assess the value ofdigital currency?

The price of digital is likely to fall to near zero

Vitalik Buterin:I think assessing the value of cryptocurrencies is still very difficult,which is part of why the space continues to be so chaotic with all of these newassets constantly appearing. I expect that over the next few years the industrywill stabilize, and we will see fewer new tokens issued and more projects thatpay more attention to providing value, and there will be more correlationbetween fundamental value and price. I think we’ll continue to see thousands oftokens, but hopefully thousands of good tokens. Ipersonally do hope that pension funds stay out of investing in crypto on alarge scale at this point; if I was a 70 year old grandma I would be very upsetif I learned that my retirement plan was invested in TRON.

Fred Wang:According to the latest market information, the market value of Bitcoinis around 108.8 billion dollars, and the market value of Ethereum is around48.9 billion dollars. Is it possible for the market value of Ethereum to exceedBitcoin in the future? Will the value of ETH be affected if the price ofBitcoin becomes 0 ?(We of course believe this possibility canbasically be checked off.) Haha.if (BTC value == 0) {ETH value = ?;}

Vitalik Buterin:Even though the prices continue to be fairly correlated day-to-day, insuch extreme cases I really don’t think ETH is that dependent on bitcoinanymore. Bitcoin is just one cryptocurrency of many. And I personally am veryhappy that the crypto space has diversified to this point; I think it is goodfor decentralization and makes it more difficult to shut every cryptocurrencydown when you have so many approaches trying out different technologies. There are definitely smart people there working on these projects; I hopethat at least some of them turn out to be good and succeed.

Question 5

Fred Wang:On June 5, Microsoft announced that it had spent $7.5 billion to acquireGitHub, an online open source and collaboration platform. Currently, GitHub,which has more than 28 million developers, already hosted 85 millionrepositories.

Some people welcomed thismove. But some blockchain developers felt uneasy about the deal. They believedthat Microsoft has always been against the open source community by using itscentralized power. In fact, Microsoft is not a friend of the open sourcecommunity. 10 years ago, Microsoft was accused of secretly attacking the patentof the open source software Linux. Former Microsoft CEO Steve Ballmer evenlabeled Linux as a‘cancer’. Even now, Microsoft still requires Android vendorsto pay Android patent fees. Therefore, many open source enthusiasts anddevelopers believe that Microsoft is not worth trusting.

What would you say aboutthe deal? Do you think GitHub will keep its truly independent operation in thefuture?

GitHubacquisition

Vitalik Buterin:I know Microsoft has been very hostile to open source before, and Iremember the early 2000s when the internet community saw them as the big evilenemy. That said, from my interactions with them and seeing their behavior morerecently I feel like they have taken many steps to improve their relationshipwith open source. It’s not perfect, but we’re seeing Azure cloud computingoffering Linux, more and more contributions to open source, etc etc.

I personally see noreasons to be very afraid in the short term, that said, we should definitely bevigilant to ensure that Github does not become a monopoly and that there arealternatives we can switch to if there are any issues.

Fred Wang:Let me follow up, Recently, the BTC core developer team said they arelikely to migrate their code to other platforms, such as Google-backed GitLab.so，has Ethereum considered moving the code out of GitHub in the future?

Vitalik Buterin:I personally think it is very unhealthy when startups see their mainbusiness model as being VC followed by a hope of acquisition by a big company.It creates something closer to a centrally planned command economy than a freemarket, because the incentives are set by a small group of big companies, andnot the customers.Regarding the Parity proposal, there was EIP 999, but EIP 999 saw anegative reaction in the github and reddit threads and had a 55% no vs 39% yesresult in the etherchain coin vote (https://www.etherchain.org/coinvote/poll/35 ), so seems like there is littleinterest in pushing that forward. At this point, I think it is very possible thatethereum will never see any more coin recoveries, because there are enoughcases that are politically contentious that any attempt to set a bar will leadto people just below the bar complaining that they were not included. Though itis also possible that when we move to sharding, there will be some kind ofone-time “cleanup” of the public chain that will restore funds to asmany people as possible. That said, I do not think it is my place to make thatdecision or even heavily influence it.

Question 6

Fred Wang:Let’s talk about China. Your legendary stories have been widely spread inmy home country.

I heard that you werecalled a fraud(骗子) when you attended a road show in the Bund ofShanghai. Moreover, someone told me that you were standing on the corner of thelast row when people took a picture in a Shenzhen blockchain meeting. It isinteresting to hear that some Chinese investors rejected your funding request.

Could you please tell usmore about your China Trip? What were the typical points of view peoplehad on Ethereum at that time?

Vitalik Buterin:The first China trip in 2014 was interesting; I got to meet the Chinesecommunity for the first time. Back then there was a heavy focus on exchangesand mining; there still is to some extent, though more and more development ofactual technical projects. I unfortunately did not really understand much theChinese community’s reaction then, how many people were interested, how manypeople thought I was a fraud, etc. When creating a radical new project, of coursethere will be many people who think it is crazy. Though at the same time, Iunderstand them; there are many projects in the space that really are crazy.

Fred Wang:Haha,Bo Shen, a general partner at Fenbushi Capital, believes that the differencesbetween Chinese blockchain projects and American block projects rests inauthenticity. To some extent Chinese blockchain projects are more controversial.Could you please kindly talk about your overall impression of Chineseblockchain projects?

Vitalik Buterin:I think that the quality of Chinese developers in the blockchain spacehas definitely been improving lately; I was impressed by the quality ofattendees at the event in Beijing in June. I feel the main challenge in Chinahas been on the research side; if you look at who is inventing algorithms likeproof of stake, sharding, zero knowledge proofs, etc, it is all happeningmostly in the USA and Israel, and somewhat in Europe; in Asia perhaps only inSingapore. That said, I have been starting to see more academic papers comingfrom China recently and have hopes that the research side will improve. I honestly do not spend much time focusing on the thousands of differentblockchain apps at this point; I have to focus on something, which is right nowbase-layer blockchain protocols.

Fred Wang:You have a picture taken on Chinese KTV. You looked very relaxed. It issaid that you are fluent in Chinese. Do you know that you have a nicknamecalled ‘V GOD(V神)‘in China? Do you like the nickname?

Vitalik Buterin:Yes, I do think that the best thing to do for any blockchain protocol isto switch to or use PoS. ASICs are far too centralized, and we know that rightnow in bitcoin one person is producing a very large portion of all the ASICsand running many of them. ASIC-resistant PoW is more decentralized, but we haveseen this year that there have been attacks on ASIC-resistant coins from rentedGPUs, and there is more and more evidence that maintaining ASIC resistance isvery difficult, see this article from David Vorick:

https://blog.sia.tech/the-state-of-cryptocurrency-mining-538004a37f9b

So with ASIC-friendly andASIC-resistant PoW both not looking very good, I think PoS is best. It will absolutely require a hard fork. If your question is, will itcause a chain split like ETC, I think the answer is no, in part because I thinkall of the serious PoW fans have already migrated to ETC. VitalikButerin:不能说我的中文流利，我的中文水平还不够回答这种复杂技术和哲学问题。

Fred Wang: 我的中文不如你，我是重庆人，中国南方人，很久才学会说普通话。说曹操，曹操到，你明白吗?

Vitalik Buterin:哈哈，不认识

Fred Wang: By theway, what do you think about Ethereum being translated as ‘Yi Tai Fang’ inChinese? ‘Fang’ is often being used to describe a room or building in whichthings are made or repaired using tools or machinery, like a workshop.

Vitalik Buterin:yes, I know.I thought it was a great name，I knowsome suggested 以太系 and others instead, but I like how 以太坊 looks nice and symmetrical. Yeah, I definitely do not worry.

Question 7

Fred Wang: Yourfather Dmitry Buterin, a co-founder of an early blockchain incubator, was yourfirst teacher to encourage you to enter the blockchain industry. Heintroduced Bitcoin to you when you were 17 years old. I heard you wereskeptical about Bitcoin at that time. But two years later, you decided to enterthe blockchain industry.

Do you talk to yourfather often about things you do now? Does he give you any suggestions? Whatdid he say when you launched the first version of Ethereum?

Vitalik Buterin and his father

Vitalik Buterin:He was definitely very proud when ethereum launched, and participated inthe sale and got many of his friends to participate

He recently sold hiscompany, Wild Apricot, and I know he is looking to do more and more things inthe blockchain space now; he’s already part of BlockGeeks. So we always havemuch to talk about.

Fred Wang: I alsoheard that you were good at World of Warcraft before you entered the blockchainworld. What is your game role? Were you inspired by the game when you designedEthereum?

Vitalik Buterin:yes,I had many characters in World of Warcraft; I had a level 80 mage andlevel 80 warlock, a level 73 paladin, and many others that I have sinceforgotten. I haven’t played in nearly eight years. These days I often reallylike taking long walks in parks; it is possible that seeing the virtual naturein world of warcraft made me enjoy seeing real nature.

I don’t think there wasmuch connection between WoW and ethereum though; the fact that there’s a kindof enemy in World of Warcraft called Ethereals was either coincidental, orpossibly subconscious.

Fred Wang: According to reports, the Ethereum project raised100,000 USD led by Peter Thiel in 2014. He is a famous angel investor inSilicon Valley and the co-founder of PayPal. Moreover, he is one of the firstinvestors in Facebook. Peter said that he doubts most of the digital currency，but he thinks Bitcoin is undervalued.

What does he say aboutwhat you do? Did you take any suggestions from him when you entered theblockchain industry?

Vitalik Buterin:I actually have not interacted with Peter much, surprisingly enough. Ihave talked much more with the people that work for his projects, like theThiel Foundation, Mithril, etc.I know our philosophies have differences; I talk about decentralization,he talks about how great it is to build monopolies

Fred Wang: I fell Peter Thiel is not popular with people.

Question 8

Fred Wang: Smartcontracts provides great help to blockchain applications. But so far, thebiggest applications of Ethereum rest in issuing tokens. We found that there isa tutorial on the Internet to teach people how to issue tokens on the Ethereumblockchain in 3 minutes.According to a research report published by Goldman Sachs in June 2017,ICO funding exceeded the total amount of early VC investments. Meanwhile, thisbrand-new funding model inspired a global wealth effect. Many lucky youngpeople made their first fortunes, and they therefore have the ability to buyluxury houses and Lamborghinis.

Your personal wealth hasincreased rapidly. What has changed in your life? I know that you donated tothe Bill & Melinda Gates Foundation and GiveDirectly. When did you have theidea to donate?

Vitalik Buterin:Not that much has changed for me personally, only that I do not have totake two-dollar buses to get around everywhere . Having more money for me isnot about big houses and cars, it is about having safety so that I feel free todo what I want without having to worry about money, so I can focus on what Ithink is valuable without wasting my time or compromising my values.

Also, I am happy that theEthereum Foundation has the funding to safely continue development for many moreyears, and that we are now able to be the ones that are also funding outsidegroups through our grant program, and cutting-edge research, like our recent$5m grant to Dan Boneh’s lab at Stanford ( https://cbr.stanford.edu ). As fordonating to the Against Malaria Foundation (not the same thing as the Bill& Melinda Gates foundation, even though both work a lot on malaria),GiveDirectly, and SENS, I feel that the money I have gives me a uniqueopportunity to save thousands of lives and support important work for humanityby giving to these groups, and so it’s obvious that that’s where the moneyshould go. It feels wrong to buy a lambo when that money could have gone toprotect thousands of people in Africa from malaria or help them buy food.

Question 9

Fred Wang:You proposed a funding model called DAICO in January. Blockchainprojects are able to fund by utilizing smart contracts, a little bit likegambling. The funding can be gradually distributed to development teams. May Iknow why you proposed the DAICO?

Vitalik Buterin:The basic idea behind DAICO is to solve a major problem that I see withICOs, where the funding for the project is front-loaded, so before a companyreceives funding they have the incentive to focus on heavy marketing but aftera company receives funding for the project they have little incentive tocontinue development, not run away, maintain quality, etc.

The intention of a DAICOis to create a structure where the project developers only get funding a smallamount at a time, and token holders can vote on whether or not the teamdeserves to get a larger amount of funding, and can also vote to cancel theproject and return all remaining funds to themselves. This can align incentivesbetter between token holders and developers.

Fred Wang: Fivemonths have passed now, so how has the DAICO come along? In your point of view,do you think that the DAICO can truly be accepted by most blockchainentrepreneurs?

Vitalik Buterin:I am not aware of how it is coming along; the DAICO is just an idea thatI published. I know that there are many projects that are trying to implementit. I hope that we will see from the first few experiments how well it works,and we will be able to learn from them. I seeblockchains and smart contracts as a platform for building decentralizedeconomic institutions and solving problems without putting all the power intotrusted authorities, and so if our community is serious about this, it makes alot of sense to try to experiment with such solutions to solve the problems withinour own industry first and foremost. We are going to have a meeting in Berlin where wewill discuss Casper and Sharding progress. I know that Prysmatic Labs have madea lot of progress in setting up the infrastructure to implement sharding on topof Geth. I hope that we will see some kind of testnets later this year.

Question 10

Fred Wang:At the beginning of establishing Ethereum, you insisted that The DAOshould be a non-profit organization. I heard that some of the first 10co-founders had proposed setting up a company to operate the project. But yourejected the idea and even “fired” two core staff members. It is interesting tohear the word ‘firing’ when it comes to a decentralized non-profitorganization. We must admit that you are the key player in Ethereum. In2017 a rumor related to your death made the market value of Ethereum tank by $4billion. In 2016, you tried a hard fork to solve the crisis in which 36 millionETHs were stolen, against many people’s objections. Yousaid that the core developers of blockchain only have temporary power.Therefore, have you ever considered disappearing like Satoshi Nakamoto or justthought of taking a full year off?

Vitalik Buterin:The Ethereum Foundation is still ultimately a traditional organization;until we somehow find ways to replace it with a DAO completetely, it’s still anorganization, it can hire people, it can fire people, etc. That said, we canonly fire people from the organization, not the community; there are plentypeople whom we’ve “fired” (or who quit) from the ethereum foundation,but who went on to do great work by themselves inside the ethereum community.This is the beauty of ethereum’s decentralized nature. it’snot EF that decides, it’s the market.

Fred Wang: If so,will Ethereum development still follow the direction that you expect it to?

Vitalik Buterin:It’s not at all clear that the rumor of my death was responsible for theprice drop; that was at a time when a price downturn was taking place already.And I do believe that the DAO fork happened with the bulk of the communitysupporting it; the carbon vote, various community polls, etc, all showedsomething like 80% of people in favor of the fork. That said, as I saidearlier, I do expect things like the DAO fork to become more and more difficultover time. I think at this point the Ethereum team other than myself is definitelycompetent enough to finish the Casper and sharding roadmaps on their own; evenif I were to disappear I have full faith that they will do a good job.

The ETH issuance isactually now down to only 7 million per year. I definitely belive that now thatit is difficult for PoW to remain egalitarian, there’s no reason to increasesupply through PoW to make the distribution more fair. A supply cap seems absolutelyreasonable to implement eventually, when we are confident that it will workwell.

Question plus

Fred Wang: Thereare three types of blockchain regulations in the world as follows:

1. Some countries arefriendly to blockchain and ICOs, like Japan and Switzerland.

2. Some countries welcomeblockchain innovations, but are cautious about ICO securitization, like theUnited States and the European Union.

3. Some countriesstrictly control ICOs and cryptocurrencies, but welcome blockchain technology,like China and Russia.

Some countries hope toput blockchain applications into the existing regulatory framework, but forvarious reasons, the progress is very slow. The effect is not as good as theregulators think.

How to regulate, who toregulate and what to regulate – have become big problems for regulators. Do youhave any advice for regulators all over the world?

Vitalik Buterin:The main advice I would give is to focus on techniques like sandboxes andspecial-purpose guidelines that allow rules to be crafted around the specificexperiences and challenges of the crypto industry, rather than trying tore-interpret rules from many decades ago. The software industry has a differentculture from traditional finance, and does not find it reasonable to have towait years, spend hundreds of thousands of dollars on lawyers, and publish thetraditional style of audit reports and prospectuses, and I think this should berespected. In fact I think those kinds of traditional approaches often do notdo a good job of targeting the kind of disclosures and consumer protection thatpeople actually *want or need*. I personally am willing to publicly say that Ifind current accredited investor rules of many countries, which allow onlymillionaires to invest in securities, very unfair and plutocratic, and in somecases they can make things actually worse because they mean regular people canonly buy in at higher prices and thus more easily become victims.

That said, there iscertainly room for regulation to improve the situation in terms of requiringdisclosure and transparency, encouraging alignment of incentives, and similarchallenges. I also think the situation differs by country; in many developingcountries, for example, the level of financial education is very low, and it isdifficult for people to spot fraud and ponzis, in such contexts it makes sensefor the level of regulation to be higher. I also think that the activity ofmany regulatory bodies including the SEC so far has been quite helpful,especially relative to what many expected, in that they have taken a targetedapproach that focuses on the worst scams and encouraging an atmosphere of morecaution, without trying to attack the entire industry.

I would also add that Iam very interested in solutions that try to solve the problems that we see inthe blockchain space via technology, for example DAICOs for token issuance, andPlasma to solve the problems with exchanges having money stolen.

I’m not optimistic. Firstof all, “money-free blockchains” are necessarily private blockchains;to have a public blockchain you need to have incentives. I have seen many ofthese private chain projects, both in China and elsewhere, especially the onesthat claim to be already in production, and in reality these private chainstend to be between 7 nodes all of which are controlled by the same company, sothere is basically zero decentralization.

Fred Wang: Chinesegovernment has banned ICOs since September 4, 2017. But recently, some Chinesegovernment departments began to mention blockchain more. In order to achievetracking, verification, and other functions, some research departments evenrecommended a so-called ‘coin-free blockchain’ by using decentralizedtechnology. What do you think of the ‘coin-free blockchain’? What will happento the blockchain industry without cryptocurrency incentives?

Vitalik Buterin:I think that for applications which want something in between fullypublic and a centralized server, the much better compromise is to build aPlasma chain on top of Ethereum.

Fred Wang:Twoyears ago, Amazon, Apple, Google, Facebook and other Internet giants did notpay much attention to blockchain because of its risk.

But now, mostInternet giants have already entered the blockchain game. For example, Amazonreleased the first blockchain cloud computing SaaS solution. Apple hopesto integrate Ripple’s Interledger API protocol into Apple Pay. Google isdeveloping its own distributed ledger to support third-party release andverification transactions. Facebook, which may issue its owncryptocurrency, has established a new blockchain department.Do you believe thatthe blockchain industry will be controlled by these Internet giants? At 5 a.m. on May 21st, you published a poll on Twitter to ask whether youshould leave Ethereum and work for Google. I remember that you posted ascreenshot, which was an email from a Google employee asking if you werewilling to join the company. But later, you quickly deleted the tweet. Thereare rumors that you will leave Ethereum to join Google. Is this rumor true?

Vitalik Buterin:I think they’ll participate in the blockchain industry, but I don’t thinkthey will be able to control it. Unlike the internet, where the idealistssaying it would lead to more decentralization were only a small part of thestory, in the blockchain, maintaining decentralization is a core interest, andso many people will push back against the companies attempting to control theindustry. And ultimately, they don’t really have a way to control platformslike Ethereum.That Google thing was a joke; the email was clearly from a recruiterspamming everyone that their algos determined is a remotely competentdeveloper.

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