We’re talking about a general purpose infrastructure for funding public goods in the same way that money is a general purpose infrastructure for funding private goods. There’s definitely a lot of challenges. But at the same time, but if we can make that work… it’s huge.
Historically, progress in the field of cryptography has had major consequences. It has changed the course of major wars, made it possible to do business on the internet, and enabled private communication between both law-abiding citizens and dangerous criminals. Could it have similarly significant consequences in future?
Today’s guest — Vitalik Buterin — is world-famous as the lead developer of Ethereum, a successor to the cryptographic-currency Bitcoin, which added the capacity for smart contracts and decentralised organisations. Buterin first proposed Ethereum at the age of 20, and by the age of 23 its success had likely made him a billionaire.
At the same time, far from indulging hype about these so-called ‘blockchain’ technologies, he has been candid about the limited good accomplished by Bitcoin and other currencies developed using cryptographic tools — and the breakthroughs that will be needed before they can have a meaningful social impact. In his own words, “blockchains as they currently exist are in many ways a joke, right?”
But Buterin is not just a realist. He’s also an idealist, who has been helping to advance big ideas for new social institutions that might help people better coordinate to pursue their shared goals.
By combining theories in economics and mechanism design with advances in cryptography, he has been pioneering the new interdiscriplinary field of ‘cryptoeconomics’. Economist Tyler Cowen has observed that, “at 25, Vitalik appears to repeatedly rediscover important economics results from famous papers — without knowing about the papers at all.”
Though its applications have faced major social and technical problems, Ethereum has been used to crowdsource investment for projects and enforce contracts without the need for a central authority. But the proposals for new ways of coordinating people are far more ambitious than that.
For instance, along with previous guest Glen Weyl, Vitalik has helped develop a model for so-called ‘quadratic funding’, which in principle could transform the provision of ‘public goods’. That is, goods that people benefit from whether they help pay for them or not.
Examples of goods that are fully or partially public goods include sound decision-making in government, international peace, scientific advances, disease control, the existence of smart journalism, preventing climate change, deflecting asteroids headed to Earth, and the elimination of suffering. Their underprovision in part reflects the difficulty of getting people to pay for anything when they can instead free-ride on the efforts of others. Anything that could reduce this failure of coordination might transform the world.
The innovative leap of the ‘quadratic funding’ formula is that individuals can in principle be given the incentive to voluntarily contribute amounts that together signal to a government how much society as a whole values a public good, how much should be spent on it, and where that funding should be directed.
But these and other related proposals face major hurdles. They’re vulnerable to collusion, might be used to fund scams, and remain untested at a small scale. Not to mention that anything with a square root sign in it is going to struggle to achieve widespread societal legitimacy. Is the prize large enough to justify efforts to overcome these challenges?
In today’s extensive three-hour interview, Buterin and I cover:
- What the blockchain has accomplished so far, and what it might achieve in the next decade;
- Why many social problems can be viewed as a coordination failure to provide a public good;
- Whether any of the ideas for decentralised social systems emerging from the blockchain community could really work;
- His view of ‘effective altruism’ and ‘long-termism’;
- The difficulty of establishing true identities and preventing collusion, and why this is an important enabling technology;
- Why he is optimistic about ‘quadratic funding’, but pessimistic about replacing existing voting with ‘quadratic voting’;
- When it’s good and bad for private entities to censor online speech;
- Why humanity might have to abandon living in cities;
- And much more.
Get this episode by subscribing to our podcast on the world’s most pressing problems and how to solve them: type 80,000 Hours into your podcasting app. Or read the transcript below.
The 80,000 Hours Podcast is produced by Keiran Harris.