Effective altruism, blockchain, & better ways to fund public goods | Vitalik Buterin (2019)

Introduction & Context

• Podcast Host: Rob Wiblin, Director of Research at 80,000 Hours.
• Guest: Vitalik Buterin, co-creator of Ethereum and a key figure in blockchain theory and "crypto economics."
• Core Thesis: While current blockchain applications (primarily cryptocurrencies) have limitations and are often used for speculative or illegal purposes, the technology holds transformative potential for solving global "coordination problems" and "public goods" provision through novel incentive mechanisms.
• Relationship with Glenn Weil: Buterin collaborates with economist Glenn Weil on the "Radical Exchange Project" and co-authored the paper Liberal Radicalism, though they maintain robust disagreements on specific mechanisms.
• Buterin's Background: Born near Moscow, raised in Canada, founded Bitcoin Magazine, authored the Ethereum white paper in 2013, dropped out of the University of Waterloo in 2014 to focus on Ethereum full-time.
• Financial Status: Buterin became wealthy following the 2017 crypto bubble (Ethereum market cap reached $125 billion, now ~$25 billion) but continues to work for the non-profit Ethereum Foundation.

Current State of Blockchain Technology

• Bitcoin's Role: The primary real-world application of blockchain remains cryptocurrency, used for remittances (cheaper than traditional channels), censorship resistance, and illegal markets.
• Scalability Limitations: Bitcoin processes only ~7 transactions per second; Ethereum currently handles ~15, which is insufficient for a global economy.
• Proof of Work (PoW) Issues: Current security relies on energy-intensive Proof of Work, which Buterin criticizes as inefficient; the industry is transitioning to Proof of Stake (PoS).
• Security Vulnerabilities: Frequent issues include exchange hacks, user key loss, and smart contract vulnerabilities (e.g., Uniswap's success relies on extreme code simplicity, ~50 lines of core logic).
• Ethereum 2.0 Upgrade: A multi-year upgrade to improve scalability via "sharding" (splitting the chain into parallel threads), security via PoS, and programmability; Phase 0 (PoS) expected early next year.
• Non-Financial Applications: Early examples include "Open Certs" in Singapore for verifying university degrees without revocation, and potential uses for self-sovereign digital identities.

Mechanism Design & Solving Coordination Problems

• The Public Goods Problem: Humanity struggles to coordinate on issues where individual contributions yield diffuse benefits (e.g., poverty reduction, animal welfare, scientific research, climate change) due to "free-rider" incentives.
• Quadratic Funding (QLR): A mechanism where matching funds are allocated based on the square root of individual contributions; this incentivizes broad participation over large single donations.
  • Gitcoin CLR: An ongoing pilot in the Ethereum ecosystem with a matching pool of ~$50,000; faces challenges from "sybil attacks" (one entity creating multiple fake accounts).
• Quadratic Voting: A voting system where voting power increases with the square root of cost (1 credit = 1 vote; 4 credits = 2 votes), balancing intense minority preferences against majority rule.
  • Critique: Vulnerable to "exhaustion" if the same proposal is repeatedly voted on by the majority to bankrupt the minority.
• Harberger Taxes: A system where owners must set a price for their assets, pay a tax on that price, but are obligated to sell to anyone willing to pay that set price.
• Prediction Markets: Using financial incentives to aggregate information and forecast outcomes, potentially informing policy decisions where objectives are known but means are uncertain.
• Collusion Resistance: A major challenge where traditional mechanisms fail because they assume non-collusion; Buterin argues for "censorship-resistant" or "sybil-resistant" identities to prevent vote buying and manipulation.

Long-Termism & Existential Risks

• Long-Termism: Buterin supports the view that the moral weight of future generations (100+ years) is currently under-valued.
• AI Safety: Views AI risk as a primary existential threat; supports "hedge" strategies by funding multiple research approaches (alignment for current ML vs. fundamental AI theory).
  • Analogy: Both crypto-economics and AI safety involve using "dumb" systems (incentive mechanisms or code) to control "smart" agents (humans or superintelligence).
• Nuclear War: Believes the general public overrates the existential risk of nuclear war (likely ~1 billion deaths, not global extinction); risks are manageable through recovery and geo-engineering.
• Biotech Risks: Considers synthetic biology a more immediate existential threat due to lower barriers to entry (potentially "3D printable" in the future) compared to nuclear weapons.
• Decentralization Defense: Suggests that moving away from dense urban centers (de-urbanization) could reduce vulnerability to bio-agents, aided by trends in remote work and autonomous transportation.

Philosophy, Governance & Effective Altruism

• Effective Altruism (EA): Views EA positively for focusing on high-impact causes; critiques its lack of diversity (concentrated in Bay Area/Silicon Valley) and its ambiguous relationship with political action.
• Donation Strategy: Buterin donates to Against Malaria Foundation, GiveDirectly, SENS (anti-aging), MIRI (AI safety), and the Radical Exchange Foundation.
• Incentivizing Philanthropy: Proposes using blockchain to create "sticker" badges for donations, enabling social signaling and "charity through marginal price discrimination" (businesses offering discounts to donors).
• Free Speech: Argues that private censorship by dominant platforms (like Reddit) can be as harmful as government censorship, especially when platforms hold "natural monopolies" on discussion spaces.
  • Distinction: Supports editorial moderation in niche spaces (e.g., conference programs) but opposes it in general public forums.
• Crypto Community Sentiment: Believes the broader crypto community is "not excited enough" about philanthropy, with many wealthy holders prioritizing consumption over impact.

Forward-Looking Statements & Challenges

• Identity Solutions: Acknowledges that creating robust, unique human identity systems is a "hard problem" but essential for the success of quadratic funding and voting.
• Oracle Problem: Smart contracts cannot verify real-world events (e.g., "Did a hurricane occur?"); decentralized oracles (like Augur or Kleros) are evolving but remain vulnerable to high-stakes attacks.
• International Relations: Skeptical of using smart contracts for peace treaties due to the difficulty of verifying state compliance (the Oracle problem at scale), but sees potential in carbon credit trading and certification.
• Critique of Skeptics: Disagrees with critics like Bruce Schneier, arguing that while current blockchains are flawed, future technical advances (sharding, zero-knowledge proofs) will solve scalability and privacy, unlocking new institutional designs.
• Future of Governance: Predicts that in 5–10 years, we may see practical implementations of quadratic funding for public goods, potentially funded by "efficiency-increasing taxes" (taxing zero-sum activities to subsidize increasing returns).
• Product Gap: Identifies a shortage of "product people" in the space who can translate complex economic theory into user-friendly interfaces.