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Sunday, September 25, 2022

Ethereum’s Advantage Over Bitcoin

ASH BENNINGTON: The future of finance or forgettable fad? Digital assets like Bitcoin are divisive, but some of them have made their founder’s 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. CHARLES HOSKINSON: The 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 restless 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 a 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 custom bespoke 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 relationships. 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 to appear 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 Conference.

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 the 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.

ASH BENNINGTON: So, 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.

Read More: Earn Free Cryptocurrency Bitcoin, Ethereum, Litecoin, Ripple

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