Odd Lots - Vlad Zamfir on the Dangers of Unstoppable Software and What People Get Wrong About Blockchains

Episode Date: July 15, 2021

Vlad Zamfir is something of a crypto legend. The researcher was early into Bitcoin, and he was part of the Ethereum Foundation before it launched. He's still an active researcher in the space, but he believes the people operating in it get some basic premises wrong. One of the basic premises that people preach is the idea of database immutability. He argues that, in order for crypto to become more influential, it needs to take governance seriously and find ways to be in compliance with generally accepted ideas about the law.See omnystudio.com/listener for privacy information.

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And I'm Tracy Allaway. So Tracy, obviously we've been doing a lot of crypto episodes lately. Talk about Bitcoin and its future. A lot about defy lately. But of course, like when all this got started, I remember years ago, like people thought this was like very like dangerous sort of like provocative technology. that, you know, people like, oh, are they going to ban Bitcoin? Are they going to ban all this stuff? It feels like, I don't know, my opinion is that it feels like a lot of that stuff is like, now the dollar signs are in the air, a lot of that stuff has been sort of like forgotten about or sanitized away.

I mean, I think you still see hints of it when people talk about the potential regulatory response on things like defy and the idea of people creating synthetic stocks that basically bypass regulations. Like, there is a hint of it there. But you're absolutely right that Bitcoin and the associated technology blockchain kind of started out as this crypto anarchist dream that was very much about maybe not undermining or actually, I think you could say undermining or bypassing existing authorities and creating something that was sort of immutable and also outside of their reach. Right. Like something that totally has its own internal. governance that is permissionless, that anyone can access, that is extremely sort of durable to an outside attack, very difficult to thwart. Like, this was sort of like the philosophical underpinnings of it. And now you have people on Wall Street talk about like, oh, is Bitcoin

play a role in your retirement portfolio like gold? Or can we trade synthetic soybean futures via Ethereum? And like all that is like theoretically kind of exciting, but it doesn't feel very, it doesn't feel very cypherpunk, at least like how we thought of all this stuff in the early days. No, I think it's like that classic thing about if a technology lives long enough, it's eventually going to be co-opted by Wall Street and the thing that it probably sought to disrupt, right? Like, I'm thinking again about peer-to-peer lending and how that was supposed to bypass

traditional banks and then eventually all the banks just got in on it. But yeah, you're absolutely right. I think with all the excitement over crypto currency prices, as well as the potential for defy, we've sort of drifted away from the original crypto anarchist or cyberpunk dream. You know, that raises all kinds of questions because there's like this marriage happening between crypto and Wall Street. And sometimes I think it's like kind of going to be like oil and water. Like it looks good on paper, but can the two really interact?

And then, of course, like the question is like, well, what happens? like, okay, like maybe they can be tamed and be used to profit, but nonetheless, decentralized, distributed software databases still extremely powerful. And perhaps we forget some of the original motivation behind it at our peril. Well, I'm going to push back on that last point, but I do agree with you that like there is a tension between Wall Street getting in on technology, which is basically all about sort of decentralizing control, right? And Wall Street slash finance slash banks are very much about having, I mean, basically, they're all about having control or risk control systems in place.

And so there's sort of an open question about how useful a decentralized technology is going to actually be to them. Exactly right. Well, I think after all, after all just talk of money on recent episodes, it's good to go back to philosophy a little bit. and what these systems really are. And we have the perfect guest. Are we doing blockchain, not Bitcoin?

Is that what this episode is? Kind of. Kind of. I think that's maybe one way to put it. I think we have like the perfect guess. He's kind of a legendary figure in the crypto world. We're going to be speaking with Vlad Zamphir. He's currently an independent researcher for the Ethereum Foundation.

He's actually been involved in the Ethereum project since before launched, actually, in April 2014. Before that, he was a very early bitcoiner. And I think, you know, while everyone else likes to talk about Price, Vlad writes these sort of more philosophical pieces about blockchains and the sort of the power of this software, which he seems to recognize both the potential and the risks for. So extremely influential player in the space. He also characterizes himself in addition to being a philosopher and a formal student of the law, an absurdist. So we're going to find out what that means. Vlad, thank you so much for joining us.

Thanks, Joe. I'm a longtime fan of yours. Thank you. And I'm excited to be here. And, you know, I'm excited to talk about all these pressing issues that we have today in the space. So what do you kick us off? I mentioned your like history a little bit. You were pretty early.

You're much earlier into Bitcoin than most people. Then you got involved with the Ethereum Foundation before it actually officially launched as a tradable coin. What do you talk a little bit about your background? What, like, drew you to this space as an area of research and interest? Well, I got into Bitcoin during the 2013 Cyprus bail-in sort of financial crisis during, like, it was like one of those EU debt crises where, like, my government there decided to, like, seize money from people's bank accounts in order to pay back debt to the EU. And then, like, Bitcoin kind of, like, saw a lot of headlines then,

because people were using it in order to evade this capture. And so for me, like, I got into Bitcoin as a kind of like, a revolutionary, like, financial technology that would, like, help save people from, like, capital controls, inflation. And, like, you know, this kind of, like, you know, that, like, the global financial system has been, like, co-opted by, like, the law everywhere. Bitcoin provided a kind of escape. And so I was into Bitcoin for this, like, kind of escapist, you know,

cypher-parum kind of, like, radical, like, we can escape. the central banking system kind of agenda. And like that was exciting. Like I was excited, you know, for like the future of money at the time. And like I was really like a Bitcoin or through and through in that way. And then I got interested in Ethereum when I kind of realized that like this, you know, this like, yeah, blockchain and not Bitcoin kind of story where I hit like the technology like is useful way, way outside the scope of Bitcoin. And it's something where we could potentially use this to like decentralize, you know,

all sorts of things. And it's just intermediate into like a kind of, you know, know, do things without going through gatekeepers, you know, way outside of just money and finance. And I was interested in, like, decentralizing academia or, like, peer review through, like, content curation and things like this, which are kind of, like, still in some way, very much part of Ethereum's. I definitely want to talk about some potential use cases of the technology. But I also sort of want to jump in with one major question, which relates to what you were just saying

about the original vision for Bitcoin and why you got interested in it. But Joe's been writing a lot about Wall Street embracing Ethereum or being ethel-ed, as he puts it. So I'm just curious, like, what do you think, what is it about Ethereum that has caused it to be embraced by the financial community, like a community that a lot of people would say it should probably be bypassed, all together. Yeah. And, you know, in some way, you could say that it is. But I would say like this basically like Ethereum is very much not Bitcoin.

And it was like set up in some way to like fill some of the gaps, both like politically and technically that Bitcoin left open. And so Ethereum like, you know, very much like contrast itself to Bitcoin politically, legally. And also has this kind of programmable layer where you can build a lot of applications that are basically like not possible in Bitcoin. And those include things like famously, all the Stifi stuff that we're intro of the conversation with that is in some way like financial wizardry today.

And so there's like in some way like there is interesting financial stuff that happens on Ethereum. And Ethereum and the way it's like postured and positioned, it's not like the future of money and the way Bitcoin is. Like it's hard to understate how much not Bitcoin Ethereum is because of the kind of poor representation that Ethereum gets in the media. But like if you kind of like are in the scene, like you feel very much like Ethereum is not Bitcoin. And I think that the kind of it not being Bitcoin and it posuring in a way that's much more general amorphous, you know, you can project your own fantasies onto it.

It's not like the future of money in the same kind of like, you know, clear, defined kind of way that Bitcoin tries to be. And so I think it has like a niche in crypto currency and blockchain, like it kind of, and it kind of like created and it changed the way that people even think about the space from like, you know, just thinking about like this kind of money and finance narratives actually to get much broader than that, which at some way lets it actually provide a safe space for some of this financial activity. But that's also very questionable in terms of like how safe. Is it really to like, you know, do these things without like New York being super down with it and so on? that's what you say there like do these things without new york being super down with it is something that i like struggle with or question a lot because like on the one hand like blockchains are theoretically unsensurable we can get into how realistic that is but like that is sort of the story like okay you set the software free and you theoretically can't stop it in theory though one can imagine like um someone looking at a decent centralized lending protocol or something that certainly looks like a stock market that runs on Ethereum and saying, you know, regularly saying, hey, this is illegal. This is like securities fraud

or selling of unregistered securities. Do you expect an inevitable clash on that level? And do you think people within the sort of crypto blockchain community are naive about thinking that the law will just sort of not be an impediment in the end? Well, I mean, certainly to some extent. But I think what they really think is they think that they've thought this through and they see how it'll play out and that they're going to win this. And that like, you know, the time is right for this revolution. And like they can do this without New York's approval and like they're just going to win. You know, but basically like they have this like view actually like a different view of like the legal reality there. Like they don't they like I think they're like ready to call New York's bluff and to say like, hey, like you know, you can't tell us what to do on the blockchain. Like this is not New York.

You know, but then of course, you know, you're going to interact with a smart contract and then like, into like an illegal relationship with someone in New York and then be sued and then you're like going to the United States one day. You know, there's obviously ways in which, you know, this is going to come to a head and where people are going to get in trouble legally because of the stuff. And not only is it a place for conflict, it's like a place where like it's guaranteed that there's going to be conflict. There's no way to get around that just because of the basic like, let's say legal political realities of defy and of blockchain and blockchain governance. Can we talk a little bit more about the immutability idea of blockchain? So Joe just touched on this. And I think we have to talk about it because it's sort of central to the use case of the technology, right? This idea that you can build a code that can basically

exist and be the thing around which like multiple players or two people can come to an agreement. and it means they don't have to have a middleman and, you know, it allows for these sort of trustless transactions and things like that. But I guess my question is like, how immutable is blockchain actually given that we've had incidents of the chain or the code being corrupted? And, you know, I'm aware that as we're recording this, I think it's like almost the five-year anniversary of the Dow attack when you had, you know, someone who basically drained the Dow of all the ether. It had collected from the sale of its tokens. I think that happened in like June five years ago, something like that. So I'm just wondering like how safe, how reliable is the blockchain if we're

going to be relying on it for all these different transactions? Yeah. I mean, well, there's a lot to impact there, but like these are topics that are very near and dear to my heart. And I would say firstly that like, okay, I think like the true like revolutionary potential blockchain isn't because of the immutability thing. I don't think it's like, I don't think the immutability thing is really than misinformation or disinformation about the nature of blockchain in order to kind of manage the way that we have conflict about blockchain tech. And so like that, it's like a tactical misinformation that happened from the start in order to protect the blockchain from like what we're seeing as like political legal adversaries that are too strong for us to have like

a independent like legal way to manage disputes. Like instead we kind of have this regime where basically like we're supposed to not argue about or supposed to not really change the protocol. And I think like the real kind of like potential doesn't come really from the immutability as much as from the fact that this is a new kind of cyberspace that like isn't owned by like the guy who owns this one server. It's kind of like a cyberspace that's in a different kind of space that's like maybe more shared than is possible in like today's like software as a service kind of model. And so it's this and the ways in which we can fight over and the ways we're going to have disputes over the governance of this space, I don't think it's going to be limited

by immutability. And I think that's going to actually unlock a lot of value in blockchain to kind for us to get over this idea that it's useful because it's immutable and that it's trusted because it's immutable. I mean, it's like saying, oh, you can trust me. I put myself in a straight jacket. Like, that's something, someone who's not very trustworthy would say, you know, that's someone who's kind of like maybe up to something else would say. And in my opinion, you know, basically like one way to say it is that the norm of not disputing the software was associated tightly with the software so tightly that you don't even learn about blockchain without learning about this immutability thing. And that has created this amazing international legal order that is basically extremely deviant.

You know, like it says the software is like not allowed to be changed. And like it doesn't matter like who wants it or like what is happening. Like, you know, it's a really kind of radical founding fallacy or founding trick or like founding disinformation in like the cryptocurrency space. that we talk about the history of a little more, but all this is to say, look, I don't think that it's immutability as much as this question of like this new type of space that we could, that we have, you know, because like, you can't shut down a server or regulate a server in order to regulate the cyberspace in the way that like is kind of expected in cyberspace today. And so I think it creates new political and legal ground for dispute. And this and Satoshi and co kind of tried to front run this by saying it's immutable and like we decided that this is the protocol. forever. But like that is kind of bullshit. But that doesn't mean that blockchain's not useful. It's quite, you know, quite the opposite. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered

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Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. So let's talk about this idea a little bit more. So obviously, if I'm running an application that's like on Amazon Web Services, AWS, that's space that they own. And I have to play by their rules. And Amazon has to play by the government's rules. So that's pretty straightforward. If I'm building an application on Ethereum, that obviously creates new things.

So what do you talk us through like some of the implications of this? If we're talking about the real power of blockchain is not the immutability per se, but the idea of like a new, I guess it's like a new shape of space that exists, that's sort of like outside of the conventional way we think about like service as a software. What makes that so revolutionary? And what do you see as the sort of like, what's the conflict model, I guess, within that new realm. Yeah. So today the dominant conflict model is like this immutability thing that we kind of just talked about. But it's certainly, you know, not really like sustainable or defensible or like

analytically, like you can kind of just tell like not just from history, but like from like the institutional arrangements that like, okay, it's like it's obviously not like actually immutable. Like nothing is like really like actually immutable. That's not like a real, you know, thing for tech objects, you know, there's like always governance. And so like the, what this basically means that like the model for conflict for this new space is basically like, like undetermined, indeterminate, basically. There's no way that, like, anyone can say by, like, decree, like, what it's going to be. Because basically, no one has that legal competence or authority.

And it's kind of, like, it kind of is forcing us to reckon with the fact that law doesn't just exist inside national borders. And that, like, you know, we have to deal with the way we have disputes over software that doesn't exist and can't just be subject to this command and control line that you mentioned earlier. Just to follow up on this a little bit more, I mean, like, what is, I mean, what makes it so powerful and revolutionary? Because like in theory, like with Bitcoin, like that is, you know, it's really hard to change. It may not be strictly speaking permanently immutable, but we know, like, it is really hard to change. But what is the power that gets unlocked, in your view, by creating this new space, this new type of software? It's like the power that's created by, you know, having some, you know,

somewhere that's outside of like the jurisdiction of your state authority, which like today and for the most part is like charged with like maintaining legal order. And so, you know, it's basically like in some way, like, you know, you just aren't subject to the same disputes from the same parties that you like normally would. So like, you know, normally if you were to try to start an unregistered securities exchange, they can really like just like, you know, tell you like, no, you have to stop. And then like, you know, whereas like in. in crypto like defy today, it's like not so simple basically because it's not clear exactly like how that plays out like, you know, in the terms of the like lifespan and that conflict.

And then if it doesn't play out right, you can actually create a bigger problem through trying to shut it down. And so there's kind of like a legal non-determinism, like a legal uncertainty that it makes it difficult to see, you know, like how is Uniswap going to be like, like regulated in the U.S., for example, or like lots of other questions, you know, where it, where it just there's no legal opinion in the world that, like, is right. And it's like a matter of like, you know, real like legal non-determinism. And so I think that like creates a tremendous opportunity because it's like politically uncontested territory or politically not uncontested, but politically contested is what I mean, territory. And so and so it's a kind of whole place for like,

not just people who like want to escape finance, but also people who want to like maintain the safety of their financial systems, but also not just in finance, but, you know, because ultimately with like Ethereum and like blockchain, not Bitcoin, we kind of go way beyond just just finance. So two questions here and they're related to the points you were just making, but can you maybe elaborate on the use cases for blockchain technology? You know, we've been talking a lot about defy making synthetic stocks, things like that. But you mentioned a few other potential use cases like curation earlier. And I'd love to hear more about those. But secondly, how desirable is it to basically bypass these sensitive or politically contested areas? Like, you know, a lot of people would argue that regulation exists for a reason. there's a reason why finance in particular is heavily regulated. So I guess maybe just elaborate a little

bit more on your last point. Like, why would you want this? Why is this a desirable thing to have? Yeah. So let me say that like, okay, I think, let me answer in a reverse order. So I don't think the escape is like realistic or desirable. But I think what is, you know, something we have to face is the fact that like we don't have a national or state authority that can call the shots. And so what that means is that we need to develop legal ability, legal security without having the ability to rely on like state-enforced rules. And so what that means is, you know, the nature of law today, as we understand, it needs to kind of like, or let me take a step back. Like the most powerful legal forms today aren't equipped to deal with this particular conflict. And so it creates a tremendous opportunity for us to find ways

to manage our conflicts in a scope where that doesn't easily lend itself to the existing, like, most powerful legal forms. And so that is like a tremendous opportunity, but I don't think of it as escaping law. I think of it as discovering law, actually, and discovering, you know, and being kind of like, you know, secure in our conflicts without having this state that can, like, enforce rules so that we can, like, median. our experience of law through like the state. Because no one wants to create like a global crypto law state that will like enforce the rules on crypto. You know, it's like there's like a push against that kind of like global state in the law and just in like, you know, just like basic common sense of like how is this going to be abused

and corrupted. But thankfully, we have a tremendous legal history in the world and we have like tremendous amount of legal culture. It's not doesn't just blow it down to state rules. And so we have an opportunity to. to have important legal disputes in a way that is in some way not according to the normal status quo. And that is tremendously interesting. However, as you say, like the idea of escaping law is fallacious and dangerous and facilitates a lot of bad stuff.

And certainly I don't advocate legal escapism. I would love to, you know, fight it in particular in the context of crypto, because like people have this idea. that just because it's not in this jurisdiction of a state, that there's no law. And that's just incredibly untrue, unlike a deep, deep analytical basis in a deep, deep, deep analytical way where like it's impossible to escape the law. Like, it's just not, that's like not a thing. And so it's just like, it's just like, the particular, you know, state enforced rules legal form that people are like lazily expect to like always work, you know, but even though like, you know, it like obviously. like doesn't always, it doesn't work.

And so then they, so then they get themselves crazy thinking, like, I can escape, you know, like the law. But like, that's not, that's not reality. Like, I mean, you know, the reality is that like, it doesn't matter where you go. Like, you bring a law with you and other people will bring a lot to you. So I think it just forces us to re-evaluate as opposed to letting us escape. And that kind of like new situation where we have like where we have to deal with our conflicts in a new way is super interesting. although unfortunately today is dominated by this immutability norm,

which basically is kind of having people pretend like, oh, they can't interfere with the software. Like the software is just like fully autonomous, which I think is crazy talk because like, you know, nothing is above the law. Like nothing isn't subject to dispute. I mean, like there's no way in which like software will ever be above the law. And so it's only a matter of time before mutability becomes kind of like sideline

and minimized and we have to find another way to be secure in our conflicts around blockchain and crypto. Okay, so you say like it's kind of crazy talk to immutability norm, but it is also true that if New York regulators were like uniswap is illegal now. They can't act in the past, they could, if there was a entity offering some sort of like exchange that they didn't want, like I'm thinking like, okay, like when there used to be betting, you know, more betting markets that were available in the United States on centralized, run by centralized companies or gambling or whatever. And a regulator could say, this is illegal now, and it would go away. And that would be it. But if a regulator said, in theory, you can't do uniswap anymore or something like that, it obviously isn't as easy. Maybe, you know, it's not above the law and maybe immutability is unrealistic, but it's obviously a very different interaction than it was before when it was like, say,

the regulator is kicking out online poker site. So in your vision, how does this sort of like traditional notion of law enforcement and regulation interact with this new with this new uh with this new model yeah and I mean that's a that's a challenging question and basically like the easy thing to say is okay well you know they get to I mean they still have like all of their like local and also international legal means and they still have the ability to issue sanctions and to say like oh no like that's criminal like oh no like you know don't send money to this address because like you know or like don't buy like this and you're just like supporting terrorists like you know they have this authority to do these things and those will be and there will be like real legal consequences for people who find

themselves in the you know in like let's say like the scope of US law which is vast and so it's not like they don't have means of regulating many persons that are in the law who would be maybe using the systems and so I don't want to minimize that because like there's a lot there but I also want to say that like, you know, because of yes, immutability, but more, more generally, because of the, these protocols need to be used everywhere, you know, or not everywhere, but we, like, if they were to like, say, mandate a change to the theorem protocol in order to let them shut down uniswap, like that would become like if they're in USA or something and it wouldn't be the same, right? So you need to kind of like, there needs to be like a different level of kind of legitimacy

and coordination and opt-in on a global basis for a dispute brought. by, you know, someone to lead to this change. And so there's kind of like this sort of like nebulous culture that is going to like, you know, like judge the legitimacy of this legal order and then say whether like, you know, like budge for it. And in some way, immutability already says no, like very much like no to all of it. And so like because like that's like the status quo today, it's quite hard to imagine. however, you know, in the future, we're going to have like a basically, you know, let's say, you know, mediums for having these disputes.

It's not going to be like, you know, we just like accept state authority to like tell us what to do. I mean, because that's like not the ethos at all. But like where we like, you know, don't want to like do like and allow like all of the worst behavior. Like, you know, if you want to have like your cake you need it to, you know, you basically need to be secure about your ability to manage these conflicts. to say, like, you're right, you have a right to have your sanctions and we have the right to have our sanctions. And like, you know, we're not even like a single body politic. And so, and so like, we're not going to necessarily have like official like here's like, you know, like Ethereum, like the sanctions that like Ethereum will respect or anything like that. But through the course

of disputes and through the course of, you know, the various like events that are going to happen in crypto, you know, these things are going to change basically. And, you know, it's up to kind of like people with bright legal minds to kind of try to like front run all these situations and figure out how we can prevent some of these very bad outcomes. So, I mean, just on that note, like, what does this actually mean for society? And I know this is something that you and Vitalik have touched upon before, you know, this idea that society is basically built on contracts. And what we're talking about is a new type of contract technology or a new space for agreeing contracts in. And, you know, potentially, I take your point earlier,

but potentially contracts that can sort of like outlive or exist beyond the reach of, I guess, coordinated legal systems. Maybe that's one way of putting it. Like, what does this mean for society as a whole? Well, I mean, you know, that's an excellent question that I don't think it has like a super simple answer other than like, you know, we need to reckon with the fact that we have this kind of space now that we need to govern and to understand like how we have conflict over and around. The kind of like first thing to note though that I have to mention is like, okay, well, smart contracts aren't actually contracts like legal contracts like exist in the law. Like smart contracts are like in the Ethereum version machine.

Like if in contract law terms like smart contracts are more about execution than actually like contracting. And so, like, you know, they're not really contracts. They're more like something you might use when you're trying to avoid getting into a contract. And then you might accidentally get into a contract in some cases. But in terms of contract law, like, I mean, you can't expect too much change. I mean, contract law is like, you know, like extremely robust and like, you know, we've like been through a lot in contract law. And it's not like, you know, like smart contracts are like a new paradigm in contract law,

really, although they may be a way to, let's say, execute some terms of a contract in some cases, like for the most part, smart contracts are not legal contracts, and it's kind of a misnomer that's been both tactical and extremely effective, but also leads to this kind of idea that, like, these are contracts when they're, like, not really. And I think that, like, the question of, like, how do blockchains and cryptocurrency let us organize, you know, how the impact the way that we organize aren't, isn't going to be, like, necessarily a contract law reality, as much as it's going to be something like in terms of, you know, the new spaces and the new intersections of different cultures and economies and

stuff that are going to be facilitated in these spaces. But the question of what, like, how will blockchains affect and influence like the way we organize in society are, you know, deep and uncertain. And there is an extent to which like the technology really is, better than traditional consensus protocols. And so, like, there is a way where, like, okay, we know it will help us in some computer systems in, like, a rather clear way. But in terms of, like, you know, the promise of, like, social revolution or, like, a social change in the order or, like, a social, like, new way, like, escape or things like this,

like, those are all, like, deeply non-deterministic and, like, very unclear. Like, it could just be that, like, you know, this inspires, like, the worst kind of global totalitarianism. in a crackdown as much as it could be that, like, you know, we're able to, like, use it responsibly in a way where we can, you know, justify the maintenance of our freedoms in the law. How could this go bad? I mean, we were talking earlier before the show and you, you talk about the sort of like the danger of unstoppable software. What are some of the risks if people don't think about this right? Or if a sort of like, if a community can't sufficiently self-govern, if there does, if people fail to achieve some sort of like norms about, say,

cutting off some of the most egregious patterns of behavior that can be done on a blockchain, like, what are some of the risks that people should be thinking about? I don't necessarily want to, like, give people ideas, but I will say that, like, whatever you have anything in the law that isn't subject to dispute, you could, like, imagine it being part of, like, some Rube Goldberg machine that, like, does some kind of, like, you know, very unlawful thing in the end. So, so you can, you could imagine that, like, you know, each of these indisputable components can together, come together to make things possible,

like, you know, the sharp increase in ransomware. And like, you know, for one example that's like kind of like everyone knows about and it won't give anyone ideas for me to talk about. Like, like ransomware is a good example of something where, you know, it's just makes the business of ransom so much easier to use cryptocurrency. And so, you know, that is like some like quite obvious, you know, on lawful, bad, so many different levels conduct that is basically being facilitated here, and that we currently don't have the means to really stop, or let me rephrase, we don't have the will or the legal strategy, like legal capacity to stop. Is that something in your view that the cryptocurrency or say people within, say, the Ethereum

network, or I guess, you know, some of these are different networks, Bitcoin, Manero, etc. are these things that people who are working on governance in these areas should be more actively thinking about? Absolutely. And I think, you know, people need to be much more secure in their ability to handle conflicts in crypto. Today, they're, you know, they have these kind of, like, aggressive poshers because, like, they don't believe that they can handle these disputes.

They think that, like, if you, like, delete some coins from some ransomware attack, then like that opens the floodgates to like the government leading your coins because you didn't pay taxes or whatever, you know, you can imagine people have like fears about all the things that could happen if we started to do anything. And and and people like don't have like the security to like say, look, you know, we can judge these things. And we don't need to say, look, we don't need to like delegate to like a system that decides and therefore be captured by the system. We can have like the legal security and like the responsibility for our legal judgment in order to, you know, have our cake and egotitude to like not allow unchecked state authority, but also to not allow unchecked scammers. Since you brought up scamming and ransomware, I'm wondering if we can just go back to that question from earlier about use cases for blockchain. Yeah, because like what gets you excited about potential use cases for the tech? I'm really excited about, you know, this, like, opportunity that we have to both, both because of, like, the improvement in the technology, but also because of this crazy legal trick and this crazy legal reality that, like, crypto exists in.

I think, you know, the thing that's, like, most exciting to me is, like, this multidisciplinary mix of, like, this crazy kind of institution, which, like, you know, sometimes passes itself off as tech, but is really of a very interesting dynamic. multifaceted, like ontologically, very complex type of institution. And I think that like, you know, these, although primitive today, stand to become like complex, dynamic, very interesting institutions that get to do a lot for us that like currently we don't have in cyberspace. Because like in cyberspace today, we have basically a situation where we have a kind of a neo-feudalism where like our feudal lords who like own the big computers like own us. and I'm like not exaggerating by a lot.

And so I think there's like a state of crisis in cyberspace that crypto helps to respond to. You know, as much as also there's like a state of crisis in like global governance and global law. And like blockchain and crypto kind of like sits in that space and can help us provide new realities, new paradigms, new places where we can try again and like hopefully not fail this time to have like, you know, good. governance and have like, you know, institutions that are part of a kind of society that we want to live in. I think I think it's like, you know, very much like very much political and very much in reaction to some of the prevailing political realities today where basically like, you know, power is concentrated and in a way where perhaps with this decentralized computer, you know, kind of like, you know, like servers that are like, you know, no longer own the cyberspace.

we can maybe create and have a new balance of powers, like more balance of powers, you know, more rule of law as opposed to just, you know, having like the feudal lords or like the legislatures or the states kind of like act lawless and like lord over everyone as if like, you know, they own the law. I'm Francine Lacquhar, an award-winning journalist. And I've got a new podcast, leaders with Francine Lacqua from Bloomberg Podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious who are these people as leaders.

I don't think there's one right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow leaders with Francine Lacroix wherever you get your podcasts. Do you envision like a future theoretically in which sort of like everything that we do online, whether it's something that resembles traditional social networking, sharing, sharing stories and videos and photos with our friends, communication, that it could all essentially be done in this sort of like new decentralized sort of like crypto-based manner.

Like, is that like a future that seems realistic to you? Well, there's a number of like technical, like legal, economic, you know, there's lots of lots of barriers. And there's like a, you know, just because we have like new primitive forms in this direction and like way more possibilities than before doesn't mean that like we're there yet. I mean, like privacy in cryptocurrency is very bad. And there's a lot of basic norms around how we have disputes that like aren't really settled in a way that's like secure or sustainable. There's a lot of reasons why, you know, we can't and we shouldn't and it would be like a very bad idea for us to try to like do everything with the systems.

That said, you know, it's not clear what the technical, legal, economic, et cetera, limits are. And so that's something that's like kind of also subject to this ongoing kind of discovery, negotiation and so on. It's hard to imagine how that would look safe. It's easier to imagine like why people would do it despite it not being safe. And so, like, I'm, you know, concerned because, like, you know, of the, like, lack of basic infrastructure that's, like, required for this to be safe. However, the opportunity is there.

The stakes are there. Like, the contention is there. Like, people are ready to fight over these issues and to kind of see what happens. Although, you know, we are still in a position where we could easily see some really bad outcomes win. Like, for example, you know, like the, the top of unstoppable software, the, like, global cyber state. or like the, you know, the feudalists just controlling everything. Like, there's a lot of bad outcomes that are kind of in the cake today that, like, could easily get baked, you know, into like our reality.

But it's not, it's still, like, not set in stone yet. It's not clear, like, you know, these outcomes will happen. You know, I'm optimistic that we can find better outcomes than any of these kind of, like, established ones. I wanted to go back to the beginning of this discussion when we were talking about what attracted you into Bitcoin in the first place and then how you got interested in Ethereum. And it's a slightly weird, I guess, like cultural or values question. But some people would describe the Bitcoin community today as being, I guess, toxic is one word or like openly hostile to

outsiders and hostile to alternate visions of crypto. And so, I'm just wondering, as someone who sits on the opposite side of Bitcoin now and is heavily involved in Ethereum, how would you characterize the cultural differences between Bitcoin versus Ethereum? Yeah, I mean, I think, you know, Bitcoin has like a relatively defined culture, whereas like Ethereum's culture is still kind of like amorphous and people, you know, have different, like sustained different, very different politics and views. use within Ethereum. So Ethereum kind of is like much more diverse and in some way less toxic than

Bitcoin because like the the like incentive to like get everyone out who doesn't total the party line like isn't really like there as much in Ethereum. And so what happens is basically like Ethereum is like supports much more diversity, you know, and Ethereum by by virtue of like being more amorphous by about like being about kind of everything instead of just being about money. it kind of has you know support for much more efficient but that also means that like

there are like struggles and factions and people like having fights over like what is Ethereum in a way that like doesn't really happen in Bitcoin and Bitcoin they're kind of just like you know 21 million Bitcoin's and if you don't agree get out and if you don't like one megabyte

blocks like get out and like you know they have this kind of toxicity which which is kind of like I like to describe it as a channel authentication strategy where basically it makes it so that like you if you don't if you're not like one of them like you can't really tolerate to be there and so you kind of just by virtue of being in those channels like you're kind of authenticated and it makes it a safe space for them and I think it also it also helps them reinforce this immutability norm like earlier Joe mentioned like oh it

would be very hard to change Bitcoin and the reason is because like you have all these toxic bitcoinsers who will basically like be horrible to you if you suggest that we don't need to do this immutability thing. And not that it's like hard to change the software. It's just like hard to get through the Bitcoiners who like have this kind of like pseudo cult or like real cult or the pseudo religion around Bitcoin. I mean, I guess the question is like we've all interacted with that and we sort of know that phenomenon.

But could it be that that's a good sort of like survival strategy, a good evolutionary strategy? It's like obviously Ethereum seems to be more open to debate and governance questions seem to be more up in the air and so forth. But, you know, if you're trying to, like, bootstrap a new money into existence in a way that Bitcoin is trying to do, does it make sense, perhaps, to create this cult environment so that you go through so that even during the lean times, nobody is threat. Nobody, nobody who's involved wants to pivot or no change. Like adversity comes, and it's like, well, some people might be tempted to change the project,

but, you know, bitcoinsers by shedding themselves essentially of people who would be even tempted to think about changing the software or changing the project, like does that create a certain amount of resilience that can survive attacks or periods where the price is low and so forth? Kind of, but it also lends itself to becoming like an obsolete or like a relic or like a kind of quaint vintage item or something. You know, it's kind of, no offense. I don't know. I don't want to say it. I guess, let me say it's not the smartest strategy, I think, in the long run, because it's kind of like, you know, maximum commitment now, like committing to the position, like never change it. Like, it's kind of like it gives up on their ability to maneuver. Who knows what will happen in the future.

And it's kind of like painting yourself in a corner. You may like that corner for now, but you might find that one day you have a need to move around. and I don't think it's particularly tactical. I don't think it's particularly smart. And just from like also the point of view of like the political agenda of Bitcoin, you know, which is also which also which does involve like, you know, having some measure of legitimacy ultimately and like goodwill from society, which is undermined by this kind of like toxic hardline attitude. Yeah.

I totally agree. with that last point. And of course, there's also an irony there. It's sort of like being a technological Luddite, but at the same time, being extremely into this new technology that you think is revolutionary and is going to change the world, although I guess it's not that new anymore. But just on this note, there was one other thing I wanted to ask you. So one of the things that makes Ethereum different is that it does change. It does respond to challenges. There's a really vibrant debate over which direction Ethereum should go in, and there are different factions, but you could also describe them as communities, and they're all sort of talking to each

other about the future of Ethereum or the vision for the future. I'm just wondering, when it comes to building consensus in the Ethereum community, how helpful is it to have a sort of figurehead like Vitalik? to help that happen. Because that also seems to be like a key difference between the Ethereum community and Bitcoin that ether like sort of has a leader. Yeah. I mean, it's it's a it's a blessing and a curse. I mean, sometimes, you know, basically like sometimes people like expect Vitalik to make calls when like he doesn't like really necessarily want to.

sometimes, you know, it's really, really, really useful to have, you know, Hitalic be kind of like this mediator of, you know, the different political kind of currents in Ethereum. But basically, it also can lead to a kind of suspension of judgment where basically people think that, like, oh, like, you know, if Vitalik approves of this, it must be great, you know, and so there's definitely like cuts both ways. But I would say also, the Italic is kind of like much more, you know, benevolent dictator for Ethereum 2 than Ethereum like 1.0 where like we still have kind of like the all devs call and the EIPs and we have like this kind of process of, you know, the core developers and and in, which is some way, you know,

in some way very independent and has been for a very long time of Vitalik's like influence on a day to day basis. So Vitalik is actually really more like a researcher and like a pioneer like future direction as opposed to like, you know, providing like any basis for day to day dispute mentioned. So to sum up, it's sort of like big picture views, if I'm getting it, it feels like the message you're trying to say is, you know, there really is this potential through crypto, through blockchain, to create new regimes of governance that could in many ways be better than what exists now. And some of that may be financial, some of that may be political and so forth. But to get there, the community itself has to take governance more seriously. And that,

It can't be that if we're going to replace governance with blockchain governance, then the people who manage and sort of like contribute to these blockchains have to take the idea of law and have to take the idea of potential malleability and regulating and maybe cutting off bad behavior more seriously in order to get to this point where blockchains become an important thing. I think that's more or less right. I have life on myself like having a slight reservation around the idea that laws an idea. But like, you know, other than that, I think like that's, I think that's, I think that's, I think that's, and I think, though, you know, it's, it's more like having a kind of, uh, an ecosystem where like, you know, like the tech people are doing tech governance and you have like people with like, legal disciplinary skills doing these types of like more dealing with like the legal questions as opposed to trying to have like a kind of passing off of this institution as just technology. And so I think that the big, the big thing really is going to. to be more diverse governance or like a more multidisciplinary approach as opposed to kind of

like tech-centric approach that we kind of have now. And so it's not so much about like developers really being more realistic about law. I mean, developers don't want anything to do with law. Like they should be isolated from liability. They should be making these decisions. These decisions are crazy like like for the developers to be making, you know. Like it's not appropriate to put a software developer in this kind of legal position. And so I think, you know, there's a, there's a, there's a, there's a, there's a, there's a, there's a, there's a, there's a, a for coming on Oddlod. It's great to speak with one of the original originals in the space, one of the big thinkers. And that was a great conversation.

Appreciate you joining it. Yeah, my pleasure. Really, really fun. Thanks a lot. Take care of luck. So I thought that was actually super fascinating. You know, Tracy, have you come across like people like on Twitter who like something bad happens or something and they're like, Bitcoin fixes this?

Have you come across like that phrase? No, never. That's no, never seen. Yeah, of course, like Bitcoin. I once wrote down, I think I wrote down all the like things that Bitcoin was supposed to fix. And it was a really long list. And I remember, I think the last, the last time I did this was like in 2020 during the depths of the COVID crisis. And I remember some people were talking about blockchain like fixing the pandemic, which again seemed like a bit of a reach.

Well, I mean, like, obviously when people say that a lot of times, like, okay, I think a lot of times they're joking or just, you know, a line that people say. But I think, like, Vlad, like, raises a really interesting point, which in, you know, if you want to, like, push it deeper or something, it's like, how can Bitcoin fix this if, like, people who are involved in Bitcoin don't actually, and I think this is his point, like, don't actually seem interested in law or governance. And so like, you know, there's this sort of like belief that like somehow Bitcoin itself has these like powers to like write ills or whatever. And yet it's not obvious to me that the people who are involved in Bitcoin in any way, whether as developers or holders or anything, actually have any like interest in engaging on what it would take to fix X or Y. Totally. Well, this is why I brought up the toxicity point, which is like if you have a community that like kind of describes itself as we are changing the world, but then won't actually talk

very much about ideas of how it's changing the world. That seems problematic to me. And then the other thing is like almost by definition, Bitcoin tends to be an exclusionary community. There's a finite supply of coins that will ever be in existence. and it's sort of like, you know, first come, first serve. If you're an early adopter, you're kind of worshipped on the platform. And again, like, if you're trying to recruit people to the cause, it seems like a weird stance to take. Like, to me, I think you would want to be much more open, much more engaged and willing,

at least to talk about potential issues, either with cryptocurrency itself or the underlying technology. Right. And like, okay, like Bitcoin isn't going to fix everything. But even if you want and say like Bitcoin to like be more of like a core financial infrastructure as opposed to say gold, right? So it's like obviously like I don't think like Ethereum is the same mutable sort of like difficult to change properties as Bitcoin. But you could see like people within that community, they're clearly going for it. Like they're clearly making an effort to plug themselves into the financial system, stable coins that run. on Ethereum, you know, you get bonds, various synthetic equities that somehow are built on top of Ethereum. And so there are at least like, so, you know, you could say like that community is at least trying. Whereas, you know, you could see this sort of like, yeah, the Bitcoin community is like fantasy about like everything is going to run on a Bitcoin standard. But it's not exactly obvious to me. It's like, yeah, well, how are you going to get there? Like, what do you wait? Like, what is the plan?

And then the actual like plan of like, well, let's make this happen, then seems to to run into the contradiction to make anything happen would require like governance and effort. Totally. And like engagement and a minimum, which I certainly don't see happening. Like I see Bitcoin, like Bitcoin are sort of hiving themselves off in a corner of the internet and talking amongst themselves for the most part. Which again, like is unfortunate in many ways. And probably one of the reasons why Ethereum seems to be making more inroads into traditional corners of finance. But then again, like, there is that open question of whether or not crypto should be doing that in the first place, given the original vision of, you know, sort of being this anti-authoritarian

anti-establishment technology. Yeah. But I guess, like, just like big picture. Like, I think, like, Blod's message is, like, super interesting, which is, like, if you are, like, aiming to create power. And I thought it was like his description of just the internet, like setting aside like state power, this sort of like futile internet that we've built, which is true where it's like almost everything you do, you sort of like pay a Facebook tax or an Amazon tax or there's just a handful of like extremely powerful entities. And so it's like if you like have like a vision of replacing that power, then you sort of like have to like, you know, think about law experts. And you can't just have like, you know, software developers have it be all on them to like.

like think about society and think about law, both like sort of literal written law and sort of like common law, et cetera. And so like this sort of like call to like take this stuff seriously that thought it was like super interesting and important. Yeah, absolutely. Also his, um, the idea of sort of creating an independent separate space that you can use to create new agreements or try to like come to a new consensus. Like that to me sounds. intriguing, although I still have questions about it, but also very, very different to the Bitcoin vision. Yeah, absolutely. Okay.

Shall we leave it there? Let's leave it there. All right. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Allaway. And I'm Joe Wisenthall. You can follow me on Twitter at the stalwart.

Follow our guest on Twitter, Vlad Zamfir. He's at Vlad Zamfir. Follow our producer Laura Carlson. She's at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy, at Francesca Today. And check out all of our podcasts at Bloomberg, onto the handle at podcasts. Thanks for listening. This is Tom Keane, inviting you to join us for the Bloomberg Surveillance Podcast.

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