It is doubtful whether passersby in the Sapir (Poleg) Business and Technology Park in Netanya recognized Vitalik Buterin during his visit there late last week. The tall, geeky 25 year-old Russian Canadian has become an international celebrity in recent years, mainly among digital currency devotees, but also in other circles. At 19, Buterin was called the blockchain prodigy when he cofounded Ethereum, which soon became the second largest cryptocurrencies platform after Bitcoin.
Ethereum's founders were enthusiastic when the idea of a cryptocurrency first appeared in 2009 with the invention of bitcoin. They followed the innovative concept led by Buterin of creating a second generation of blockchain that made it possible to develop software apps and create smart contracts on a decentralized network. The big breakthrough into global consciousness by Buterin and the other Ethereum founders came in 2017 with the media buzz surrounding the leap in digital currencies prices. Ethereum's digital currency, called ether, was first listed on the cryptocurrencies exchanges in August 2015 at an initial price of less than $3. The price skyrocketed 8,600% in 2017 and reached a peak unit price of $1,390 in January 2018. Last year, however, taught a painful lesson to digital currencies investors; over 80% of ether's value was wiped out in less than a year. Ether's price in early December 2018 was a mere $90, but has now rebounded to $175, after rising 27% since the beginning of this year.
Buterin appeared unconcerned about the decline in Ethereum's value when we met him in the new offices of StarkWare Industries, a startup in which he invested. He is currently busy mainly in leading Ethereum's research for the Ethereum Foundation, a non-profit organization managed from Switzerland responsible for promoting the platform. Next week, he will take part in several events connected with the sector in the framework of Blockchain Week in Tel Aviv. One of them is a conference by StarkWare, one of whose founders is Technion Prof. Eli Ben-Sasson.
"Libra is a wakeup call for governments"
In the interview, Buterin referred, among other things, to the risks incurred through the over-concentration of cryptocurrencies exchanges. "One risk is the creation of a lack of transparency about how the prices of currencies change, and people can make a lot of money out of this lack of transparency. Another problem is the risk of break-ins at the exchanges. Unfortunately, we have reached a situation in which a $32 million theft from an exchange doesn't even make the headlines anymore. I've been warning about this problem for years, and one of the solutions we're focusing on is creating a decentralized trading theater or exchanges with no custody services," he says.
"Globes": What effect will projects like Facebook's Libra have on the blockchain industry?
Buterin: "Libra hasn't been launched yet, so a lot of things can change by then. Libra's current planned structure is not the best for privacy. They don't really have means for protecting the users' privacy. Furthermore, Libra also says that their blockchain doesn't have enough scalability (the ability of a system to adapt itself to a larger volume of activity, R.K.). Actually, Facebook expects most Libra users to keep their currencies in custody wallets. A privacy model in such a structure is essentially no different from that of conventional financial systems, in which companies have to conduct a process of customer recognition.
"In a situation like this, it's always possible that a certain company will create a wallet that does not carry out such a process, and there may be people who will use it for money laundering."
What do you think about the Chinese central bank making preparations for issuing a sovereign digital currency?
"In my opinion, projects like Libra are like a wakeup call for governments, which are now realizing that if they don't revise the technology of their sovereign currency, they will have competition. We are therefore now seeing a lot of interest in creating a sovereign digital currency."
Published by Globes, Israel business news - en.globes.co.il - on September 15, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019