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Crypto Ecosystems • December 28, 2023, 11:54PM EST
Published 1 minute earlier on



VITALIK BUTERIN SAYS ORIGINAL WEB3 VISIONS HAVE ‘FADED INTO THE BACKGROUND’

by Timmy Shen
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 * Buterin wrote today in a blog post that there’s a large ideological rift
   where the non-blockchain world would “see the crypto space as a distraction.”



Ethereum co-founder Vitalik Buterin said the original visions of Web3 have
“faded somewhat into the background” with many projects shifting away from the
core idea of decentralization.

In a blog post titled “Make Ethereum Cypherpunk Again” published today, Buterin
wrote that there is a large ideological rift “where significant parts of the
non-blockchain decentralization community see the crypto world as a distraction,
and not as a kindred spirit and a powerful ally.”

He noted that the term Web3 was originally coined by Ethereum cofounder Gavin
Wood. “Rather than seeing it, as I initially did, as ‘Bitcoin plus smart
contracts,’ Gavin thought about it more broadly as one of a set of technologies
that could together form the base layer of a more open internet stack.”

Buterin said that people use cryptocurrency to send and save money in many
countries, but they often do this through centralized means, “either through
internal transfers on centralized exchange accounts or by trading USDT on Tron.”


RISE IN TRANSACTION FEES

Buterin pointed out that the “number one culprit” he would blame as the root
cause of the shift is the rise in transaction fees.

“When the cost of writing to the chain is $0.001, or even $0.1, you could
imagine people making all kinds of applications that use blockchains in various
ways, including non-financial ways,” he wrote. 

But when transaction fees go to over $100, “degen gamblers” would remain willing
or become even more willing to play, he added.

When degen gamblers — often considered high-risk traders — become the largest
group using the chain on a large scale, “this adjusts the public perception and
the crypto space's internal culture,” he said.


POSITIVE DEVELOPMENTS

While Buterin pointed out the existing issues in the community, he also outlined
the positive developments within Ethereum in 2023. He wrote that advancements in
scaling solutions like rollups, second-generation privacy solutions, and the
emergence of account abstraction and light clients could offer hope for a
revival of the decentralized ethos.

Buterin said that there is a growing awareness that unchecked centralization and
over-financialization cannot be what crypto is about. Such increasing
realization and the key technologies mentioned above “together present us with
an opportunity to take things in a different direction,” Buterin wrote.


ZERO-KNOWLEDGE PROOFS

Zero-knowledge proofs and their increasing developer-friendliness open new
possibilities for consumer applications and privacy-preserving technologies,
according to Buterin. 

Buterin envisions a future where Ethereum becomes a hub for a range of
applications — from decentralized social media to secure, anonymous voting
systems.

“These technologies are most widely adopted as ways of improving Ethereum's
scalability, as ZK rollups, but they are also very useful for privacy,” he
continued. 

“In particular, the programmability of zero-knowledge proofs means that we can
get past the false binary of ‘anonymous but risky’ vs ‘KYC'd therefore safe,’
and get privacy and many kinds of authentication and verification at the same
time,” he added.


REITERATING CORE VALUES

Buterin also urged the Ethereum community to follow the core values — open
global participation, decentralization, censorship resistance, auditability,
credible neutrality, cooperative mindset and tool building.

“It is very possible to build things within the crypto ecosystem that do not
follow these values,” he said. “One can build a system that one calls a ‘layer
2,’ but which is actually a highly centralized system secured by a multisig,
with no plans to ever switch to something more secure.” 

“Resisting these pressures is hard, but if we do not do so, then we risk losing
the unique value of the crypto ecosystem, and recreating a clone of the existing
web2 ecosystem with extra inefficiencies and extra steps,” he added.


Disclaimer: The Block is an independent media outlet that delivers news,
research, and data. As of November 2023, Foresight Ventures is a majority
investor of The Block. Foresight Ventures invests in other companies in the
crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The
Block continues to operate independently to deliver objective, impactful, and
timely information about the crypto industry. Here are our current financial
disclosures.

© 2024 The Block. All Rights Reserved. This article is provided for
informational purposes only. It is not offered or intended to be used as legal,
tax, investment, financial, or other advice.

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