I Hope Centralized Exchanges ‘Burn in Hell’ | Ethereum Founder Vitalik Buterin

During an interview with Jon Evans at TechCrunch Sessions: Blockchain Ethereum co-founder Vitalik Buterin has stated that he would like to see centralized cryptocurrency exchanges “burn in hell as much as possible”, while conceding that such a time may yet be a while off.

Centralized Concerns

Buterin’s discussion with the host, Jon Evens, focused on issues of centralization and decentralization in cryptocurrency. Buterin, who is known for his quirky personality, provided a great deal of insight to shortcomings he has identified within the space.

The conversation began with Buterin noting that there has not been enough focus on decentralization. This statement rings true, especially when considering hash rates.

“Back in 2013, when GHash had 51 percent everybody freaked out. It’s happening a second time and people aren’t really talking about it this much.” Buterin said.

Buterin was likely alluding to Bitmain, the Chinese mining tool, which is edging toward a 51 percent of network hash rate.

Buterin hopes to make Ethereum as decentralized as possible by design. “The Ethereum Foundation tries very hard to be a decentralized organization. We try very hard not to have a very hard divide, such as you’re on the inside and you’re on the outside.”

Issues with Regulation

The discussion also touched on the balance between decentralization and adhering to formal regulation. Buterin acknowledged criticisms of the Ethereum project being too decentralized to meet regulatory requirements, stating “In a lot of industries, I understand that it comes down to compromises.” However, Buterin went on to emphasize the importance of focusing on innovation over compromise.

Vitalik Buterin Hopes Centralized Exchanges Burn in Hell
Finally, in the most quotable moment of the discussion, and perhaps even of the entire TechCrunch Sessions Blockchain event, Buterin said – “I definitely hope centralized exchanges go burn in hell as much as possible.”

There are dozens of decentralized projects to watch in 2018. Yogesh Srihari, co-founder of LQDEX, an inter-blockchain exchange launching this year, commented on Buterin’s discussion: “Buterin is right. Centralized exchanges don’t fit with the big picture of cryptocurrency. The ethos of bitcoin lies within it’s open-source, decentralized nature.”

One of the big challenges to overcome to make Ethereum truly decentralized comes down to user authentication. Sure, it’s possible to generate a private key and a public key to manage your wallet yourself. Sending ETH is all about signing a transaction so it’s not that complicated.

But what happens if you lose the keys? What happens if you lose your password? “If all user authentication methods end up failing it’s going to be hard to reach mainstream adoption,” Buterin said.

“I’m interested in social recovery, multi-key schemes,” he added. Buterin then explained WeChat’s social recovery system. If you lose your password, WeChat asks you to select people in your contact list within a big list of names. You can also imagine some sort of offline validation.

“If all fails we’ll all use Coinbase — that’ll be less fun,” he said. That remark led to a bigger discussion about decentralized exchanges.

“I definitely hope centralized exchanges go burn in hell as much as possible,” Buterin said. In particular, he thinks there’s no reason some projects need to pay $10 to $15 million in listing fees to let people trade their tokens on centralized exchanges.

According to him, centralized exchanges exist because they serve as an interface between the fiat world and the cryptocurrencies. “And the fiat world only has centralized gateways,” he said.

As for crypto-to-crypto exchanges, Buterin says that it’s still early days. But there are already clear advantage from a user’s point of view. For instance, you don’t need to sign up or login. You can send money to a wallet and define an output address. This way, exchanges only act as input/output tunnels, transferring tokens from one address to another in two different currencies.

It also means that we make a culture that is hostile to people who take themselves to seriously
Vitalik Buterin
Buterin also talked about private blockchains and other projects inspired by Ethereum. “A lot of these projects ended up not going very far. Some of them ended up being not decentralized at all,” he said.

For instance, some companies spun up 7 nodes, but they were all controlled by the same company. So it’s not exactly decentralized. “With the public network, you have a network of 16,000 computers,” Buterin said.

Once again, Buterin also said that he can’t blame them entirely. “In a lot of industries, I understand that it comes down to compromises,” he said. Sometimes you have regulatory obligations that force you to centralize at least a bit.

“Even Plasma chains are a better way to make that compromise,” Buterin said. “You get the efficiency of a centralized server, almost the same code of a centralized server, but a public blockchain fallback in case the centralized server ends up failing.”

At some point, Buterin also made fun of Bitcoin’s endless disagreements. The issue is that you have multiple groups of people who truly believe they’re right and that you should do something to ‘move forward’.

During a previous panel, Karl Floersch from the Ethereum Foundation said that Buterin was pretty good at compromising. And Buterin has a say in the culture of the Ethereum community.

“Growth of the communities definitely depends on what the earliest members believe. I think it is something where we do make a deliberate effort to basically promote the right values and attract the right people both in an inclusive sense and in an exclusive sense,” he said.

“It also means that we make a culture that is hostile to people who take themselves to seriously.”

Watch the full video Interview with Ethereum creator Vitalik Buterin at TechCrunch Blockchain conference in Zug on July 6, 2018.

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