Vitalik reviews past predictions and outlook for 2022

Ethereum co-founder Vitalik, at the beginning of 2022, reflects on his views and predictions from 2013, examining his correct judgments and areas for adjustment.

2013: How Bitcoin Helped Iranians and Argentines

Vitalik wrote an article in 2013 titled "How Bitcoin Helped Iranians and Argentines," emphasizing Bitcoin's cross-border nature and censorship resistance rather than its scarcity of 21 million coins, also predicting the prosperity of stablecoins.

In 2022, Vitalik wrote, "Last week, I actually went to Argentina! My judgment: it's mostly correct. Cryptocurrency adoption is high, but stablecoin adoption is also high; many businesses operate using USDT. Of course, if the US dollar itself starts having more problems, this may change."

2013: Bitcoin Regulation

In another article from 2013 about Bitcoin regulation, Vitalik's core argument was that Bitcoin's resistance to government is not due to cleverly evading regulations but its technical censorship resistance.

By 2022, Vitalik's perspective evolved, stating, "My current view is: Of course, Bitcoin's decentralization will allow it to survive in a super hostile regulatory environment, but it cannot thrive. A successful censorship-resistant strategy requires a combination of technical robustness and public legitimacy."

2015 Prediction on PoS

Reminiscing about his 2015 predictions for Ethereum transitioning to PoS and sharding, Vitalik admitted, "To be honest, these were wildly wrong, worthy of a good laugh." He cited underestimating the complexity of software development and the difference between Python concept validation and moderate production implementation. He referenced the 12-dimensional hypercube mentioned in 2014 as an example.

Looking at 2022, Vitalik noted that the Ethereum research team now values simplicity: simplicity in final design, implementation paths, and a better understanding of practical compromises. The new sharding design by Dankrad aligns well with this spirit.

2017: Transaction Costs Should Not Exceed Five Cents

The high gas fees on Ethereum still bother Vitalik. He maintained his stance that the cost of every transaction on the currency internet should not exceed 5 cents, a goal set in 2017. This is why Ethereum has spent significant time researching scalability.

He added that the core idea of sharding remains.

• Blockchain 1.0: Every node downloads everything, achieving consensus
• BitTorrent: Each node only downloads some things but does not achieve consensus
• Ideal: Efficiency similar to BitTorrent but with consensus similar to blockchain. The core supporting technologies are committees, ZK-SNARK, and data availability sampling.

Transition from PoW to PoS

In 2012, Vitalik defended Proof of Work (PoW) against energy consumption accusations. By 2013, he became excited about finding an alternative to PoS, and by 2014, he was more convinced of this mechanism.

He believed this reflected his intellectual evolution: from "X" is something I must defend, so anything favorable to X must be correct, to "I like X, but X has flaws, it seems Y will help, so I now support X+Y." Soldier mentality -> Scout mentality. This concept seems to stem from books Vitalik has read.

2014: Self-Enforcing Contracts

Reflecting on an article he wrote in 2014 on "DAOs Are Not Scary, Part 1: Self-Enforcing Contracts and Factum Law," Vitalik argued that making society more like a formal system is good and something to look forward to.

Later, in 2019, when writing about collusion, he referenced 1 and referenced 2, seeing the limitations of this form. Essentially, pushing everything into a formal system poses a vulnerability as almost any formal system with more than 2 participants is attackable.

Changing Views on Altcoins

Looking back on an article he wrote in September 2013, during Bitcoin's dominance, defending altcoins before Ethereum emerged two months later, Vitalik questioned if he still supports altcoins. He mentioned that the parameters he listed are not as strong now because:

• Single blockchains are more versatile
• Applications are more complex, posing greater bridging risks
• Feasible experiments are being conducted on Layer 2

However, he still believes there are things that cannot be achieved on L2, hence different L1s still have room for development.

View on Bitcoin Cash

In 2017, Vitalik expressed optimism about Bitcoin Cash, favoring the big block argument in the scaling war rather than the small block argument.

However, looking back, Vitalik deemed BCH a failure. His main point was that communities formed out of rebellion, even with good reasons, often struggle to sustain because they value bravery over capability and unite in resistance rather than a cohesive path forward.

Foreseeing and Advocating for Uniswap's Emergence

Reflecting on his article from 2017 "On Path Independence," Vitalik stated that these articles from 2016 to 2017 were essentially calling for the creation of Uniswap. He felt proud of this and self-deprecating about how he easily grasped such concepts but took longer to find PoS and sharding.

Elements in the Ethereum Whitepaper, Except NFTs

• ERC20-like tokens
• Algorithmic stablecoins
• Domain systems similar to ENS
• Decentralized storage and computation
• DAOs
• Wallets with withdrawal limits
• Oracles
• Prediction markets

Many of these elements predicted in the Ethereum whitepaper turned out to be correct, essentially predicting DeFi. While incentivized file storage and computation have not been as hot or have not yet materialized, he fully admits missing out on NFTs. Vitalik also emphasizes the issue of collusion in DAO governance.

Opinions on Stablecoins and Oracles

Reflecting on his 2014 thoughts on stablecoins, including a discussion on whether on-chain data could be used as a pseudo-oracle to make stablecoins independent of oracles.

He mentioned, "I am now more pessimistic about this, especially due to the PoS transition. We will need oracles. If we want stablecoins to remain robust in the event of a US dollar collapse – if that happens – through a switch to their own local CPI, we will need more active governance."

Concluding Thoughts

Vitalik summarized:

• I used to have a more naive view of politics and large-scale human organizations. I focused too much on simple and complete formal models; I did not like challenges to culture and legitimacy, but now I do.
• Early on, I did have good intuition to avoid the craziest parts of Bitcoin extremist thinking. I made some mistakes early on but corrected them quickly. However, errors in X do not mean that any specific opposition to X will go smoothly! Politics is not easy.
• Technically, I was more correct in abstract ideas than in software development issues. Over time, I must learn to understand the latter.
• I now know that I need to be simpler than we imagine.