Ethereum’s Advantage Over Bitcoin (w/ Charles Hoskinson)

ASH BENNINGTON: The future of
finance or forgettable fad?
Digital assets like Bitcoin
are divisive, but some of them
have made their founders
incredibly rich.
This series gives
you a chance to hear
from some of the most
influential people
in the crypto world.
And in this episode, you’ll
hear from Charles Hoskinson, one
of the founders of Ethereum.
He explains what the
process of creating
one of the world’s most
important cryptocurrencies
was actually like.

venture I’m usually
most known for is Ethereum,
which I started shortly
after setting up Invictus
innovations with Vitalik
Buterin and several
other people.
To understand
Ethereum, and you have
to understand Bitcoin and
what problem Bitcoin solves.
So Bitcoin is all about saying,
can I create a money system
where Alice and Bob can
transact with each other
in a trustless way and with
a decentralized database
recording all
those transactions?
So in other words, when
Alice sends that transaction,
it gets recorded in some
magic ledger in the sky,
like a giant spreadsheet in the
sky, that once it’s in there,
can never go out.
It’s tamper-resistant
and it’s immutable,
and it’s time stamped
and auditable.
So that’s a wonderful concept.
And that alone, with the
notion of digital scarcity,
allowed a currency to form.
But the minute that
you have a currency,
people immediately
start saying, well,
what else can I do with it?
Is it just the ability to move
value between Alice or Bob?
What about the story
behind that value?
The metadata, the context,
the contractual relationship.
For example, what
if Alice says, I’ll
mow your lawn if
you pay me $100?
Well, that’s a contract.
So what if Alice mows the
lawn and Bob doesn’t pay her?
That can’t be reflected
in a system like Bitcoin.
So what we wanted to do, is
add a programming language
to a blockchain, so that these
bespoke custom transactions
could be coded much the same way
someone would write JavaScript
in a web browser, and that
in turn, would allow people
to have any type of
financial relationship
that they wanted to have.
Very simple relationships
to arbitrarily complex
So this was kind of the naive
notion that we had in 2013
for Ethereum is, can we
had a programming language
to a blockchain so
that we can then
allow people to facilitate
more complex commerce, known
as smart contracts?
The best projects are
projects of frustration.
So most of the
people who started
Ethereum, they
didn’t start and say,
hey, we’re just going to go
build some magic new blockchain
and it’s going to have all
these capabilities and they
did this in a clean room
in a very academic way.
They all started working
on other projects.
For example, Jeff was
working on Mastercoin.
Vitalik was working
on Colored Coins.
I’d been working on BitShares.
And each and every one of
us had the same scenario,
where there was something
we wanted to do,
but the nature of
blockchain technology
or the nature of blockchains
that had already been deployed,
made it very difficult
and time-consuming
and expensive to do
these very simple things.
So we had to say, there
must be a better way.
So what occurred
was that Vitalik
started aggregating really good
ideas, ideas that he learned
from Sergio Lerner, ideas
that he learned while working
on Colored Coins and
Mastercoin, and kind
of stitched them all together
into an initial white paper.
Then, all open source projects,
that attracts attention
if it’s a good idea.
And so we started
appearing out of the ether
and discovering hey, this
is an interesting thing.
I’d like to help
and collaborate.
And then somewhere
along the way,
we decided that it was a
good idea for everybody
to meet each other.
So really the turning
point between this
is a discussion about
a cool thing we could
do to something that
we actually wanted
to devote time, money and effort
to, was in January of 2014.
Most of the Ethereum
founders met up
in a beach house in Miami for
the North American Bitcoin
It was a wonderful trip.
And we had an opportunity
to really seriously discuss
not only the technology
and what it would require,
but also the philosophy.
What are we actually
trying to do?
Now from that, we had
reached an internal consensus
that this is something
we’d like to pursue.
But you can’t just build
a product in isolation.
You have to actually go show it
off and see if anybody cares.
So we thought we were all crazy.
We’d show the world
and they’d say,
ah, we don’t care
about this stuff,
and there’d be no interest
and we’d just all go home
and go do something else.
Maybe start a bakery
in Hawaii or something.
So what we did, is we
went to the conference,
we did some presentations.
Vitalik presented
at the conference
and I did a debate with Dan
Larimer and David Johnston.
David represented
Mastercoin, Dan
represented BitShares and
I represented Ethereum.
And we got almost like a
Mick Jagger-esque rock star
reception to our presentation.
Vitalik, for example,
right after he presented,
was mobbed by people.
And it took nearly an
hour to pull him out
of that circle of people
who had questions.
So we realized that we had
something very, very special.
The problem is then,
now we have momentum,
we have something
special, we have
a group of people that
are willing to do it,
you very naturally go to
the next question, which
is, how do you do it?
Where do we do it?
How do we execute?
And that was the
hard part, the devil
in the details behind Ethereum.
Charles Hoskinson
describes Ethereum as a
project of frustration.
Looking to do more with
blockchain technology,
a team headed by
Vitalik Buterin,
created a coin that facilitated
so-called smart contracts.
In other words,
what they created
was a method for
tying transactions
to real world outcomes.
The creation is called Ethereum.
And it has become one of the
most valuable cryptocurrencies.
For Real Vision,
I’m Ash Bennington.

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