Key Points
Vitalik Buterin, co-founder of the second most popular cryptocurrency, sat down with CNBC’s MacKenzie Sigalos in Prague, one of Europe’s new crypto hotbeds.
He discussed the growing cryptocurrency crackdown in the United States and suggested that developing countries continue the cryptocurrency revolution.
He also spoke of his outsized role in the cryptocurrency he created, but argued that his creation had taken on a life of its own and was therefore more resistant to government crackdowns.
PRAGUE — For Vitalik Buterin, the idea of home is fleeting. The Russian-born programmer who built Ethereum as a teenager no longer spends much time in any one city. Meanwhile, the list of places he won’t go grows.
“Three years ago, I would have certainly been very happy to visit some countries, but I’m very apprehensive about visiting today,” Buterin told CNBC in the Czech Republic.
Buterin specifically named his native Russia as one of the destinations he’s now avoiding. The Canadian immigrant is of both Ukrainian and Russian descent, but he actively supports the country’s resistance movement. It’s also clear that pursuing privacy technology and open-source code poses risks in certain global jurisdictions, which has given Buterin new hesitations — the creator of open-source protocol Tornado Cash, for example, faces charges in both the Netherlands and the United States. In the still-nascent cryptocurrency market, some people use Tornado Cash to protect their privacy, but mixing services can also be used by criminals or nation-states to launder money. Many in the industry worry that targeting developers who build tools, rather than just bad actors who use them, sets a dangerous precedent.
“Even in countries that are still considered fairly normal by the mainstream, I’m definitely more worried about those places,” Buterin said.
The decentralized lifestyle suits Buterin, a 29-year-old programmer whose influence in the cryptocurrency space transcends code lines or geographic locations. Prague is a new center of gravity, where he now finds refuge among like-minded programmers who share a desire to change the world through crypto.
We meet in a sparsely furnished room atop a sprawling industrial complex in the Holešovice district, a neighborhood once synonymous with slaughterhouses and steam plants and now home to bohemian artists and some of crypto’s most rebellious believers. The interior of this seemingly nondescript structure is a honeycomb of labyrinthine corridors and winding staircases that wind into a fortress-like underbelly, echoing the complexity of crypto to the unfamiliar.
Today, the biggest challenge facing Buterin and the Ethereum community is making sure it provides actual value to people. "My overall view of the Ethereum ecosystem is that the last decade was a decade of playing around and using Ethereum properly. This decade is the decade where we have to actually build something that people use," Buterin said, clasping his hands together and leaning forward in his ergonomic kneeling chair.
He’s arguably the most influential crypto developer working today, but Buterin didn’t seek the spotlight when he wrote the Ethereum white paper in 2013. Still, over the years, after shunning public acclaim and countless invitations to speak to the media, he’s been unable to shake his reputation, or the superlatives used to describe him.
Buterin was named the world’s youngest crypto billionaire at age 27, and the cryptocurrency market peaked in 2021. They call him “V God” in China, Time magazine called him crypto royalty in an April 2022 cover story, and he faces a horde of fans desperate for his attention and selfies almost anywhere he goes on the planet.
But Buterin isn’t really that kind of person. He’s not the prince of cryptocurrency. He’s not the cult leader of a new generation of cypherpunks. He’s not the weirdest nerd, or the nerdiest. He regularly donates his fortune to worthy causes, deflating his net worth. By his own estimation, he’s not an authority on the Ethereum network.
Yet, he is a man who cares deeply about achieving his vision of a world where human beings have fair access to money no matter who they are or where they live.
Buterin found that cryptocurrencies have been most effective in emerging economies, a phenomenon that has intensified in recent years.
“The things that we often think of as a bit basic and boring are exactly the things that are bringing a lot of value to them right now, like making payments work and savings,” Buterin said, referring to low-income countries.
“Just the ability to be integrated into the international economy — those are things they don’t have, and that provides tremendous value to the people there.”
In Ethereum circles, hackers are known as BUIDLers, a deliberate misspelling of the word “builder” and a nod to the Bitcoin meme HODL, or “hold on for dear life.” The meme may seem silly, but it’s central to the distinction between these two very different groups of people.
Whereas Bitcoin tends to develop at a slower pace, prioritizing security and decentralization above all else, Ethereum programmers tend to be more arrogant. While they don’t necessarily break things as they go along, they do move quickly and aggressively patch things.
Last year, for example, the Ethereum network fundamentally changed the way blockchains secure the network and verify transactions, reducing its energy consumption by more than 99% in the process. Prior to this upgrade, the Bitcoin and Ethereum blockchains had their own large networks of miners around the world, running highly specialized computers that crunched mathematical equations to verify transactions. Proof of work consumes a lot of energy and is one of the industry's biggest targets of criticism.
But with the upgrade, ethereum moved to a system known as proof-of-stake, which swaps out miners for validators. Rather than running large banks of computers, validators use their existing cache of ether to verify transactions and mint new tokens.
Buterin insisted that Ethereum’s move to a proof-of-stake model would make it more resistant to government interference.
“The fact is that proof of stake is easier to anonymize and harder to shut down than proof of work,” he said. “Proof of work requires a lot of physical equipment and it requires a lot of electricity. These are exactly the kinds of things that drug enforcement agencies have been detecting for decades.”
Regarding the Ethereum network, he said: “On the other hand, you have your laptop. You just install a VPN somewhere and hide it in a corner. It’s not perfect, but it’s certainly a lot easier to hide.”
In previous performances in Denver and Paris, Buterin’s stage presence was marked by a subtle unease. But during the one-on-one in Prague, he really came alive, shedding his tics and effortlessly swapping the persona of elusive coder for enlightened educator.
His transparent communication style, coupled with his willingness to engage in deep philosophical discussions around concepts like quadratic funding, a way to raise funds in a central cryptocurrency that is then used to fund public goods projects on Ethereum, all powered by an algorithm designed to optimize spending decisions, and Soul’s digital identity on the blockchain, makes him a trusted thought leader in the crypto community.
Notably, Buterin is also more than willing to answer any questions posed to him, especially those critical of the network and the scope of his leadership position today.
Take, for example, his own outsized role in the cryptocurrency he created. Unlike the pseudonymous and hidden Satoshi Nakamoto, who created Bitcoin, Buterin is largely the face of Ethereum.
Some see this as a significant weakness of the network, since governments could target Buterin or the Ethereum Foundation. Buterin rejects those arguments. Five years ago, he said, it was more about him and the foundation, but today, clients — independently-running software applications built on top of the blockchain — do a lot of the work. Ethereum, he said, has become its own autonomous ecosystem with no single point of failure.
“Even if the foundation gets some magical freezing order in every jurisdiction at the same time, if something happens to me at the same time, the entire company as the sole maintainer of the ethereum client is perfectly capable of continuing to operate,” Buterin explained.
They call it the philosophy of subtraction.
“I think one way to describe its goals is basically that the Ethereum Foundation is not trying to be the enthusiast or the long-term operator or the dominant player or anything like that,” he said. “The Ethereum Foundation’s goal is to foster things that, once started, can continue in a completely independent way.”
In terms of what’s next for Ethereum, Buterin said it’s imperative to focus on privacy and scalability through zero-knowledge rollups. This second-layer technology plays an important role in future upgrades and will ultimately help make Ethereum faster and cheaper to use.
“There’s definitely a certain level of divergence of interests, and I think the ecosystem really needs to find a way to fight for the right to continue to build things with the kind of privacy that we’ve been accustomed to for thousands of years,” Buterin said.
Clarification: Buterin does not believe he is being specifically targeted by any country