The world of cryptocurrency has weathered another turbulent cycle. As markets retract and speculation fades, the need for grounded, thoughtful leadership becomes more apparent than ever. In a revealing conversation, Ethereum co-founder Vitalik Buterin (affectionately known as "Vitalik" or "Vitalik Buterin") shares his insights on the current state and long-term trajectory of blockchain technology, touching on consensus mechanisms, market cycles, security models, decentralized governance, and the potential for crypto-native social structures.
This dialogue offers a rare blend of technical depth and philosophical reflection — essential reading for anyone seeking to understand not just where crypto stands today, but where it might be headed.
The Inevitability of Market Corrections
Noah Smith (N.S.): Let’s start with the obvious — nearly all cryptocurrencies have crashed in recent months. What do you think caused this, and what does it mean for the long-term future of the ecosystem?
Vitalik Buterin (V.B.): Honestly, I’m more surprised the crash didn’t happen sooner. Historically, crypto bubbles last about 6 to 9 months after breaking previous highs before collapsing rapidly. This last bull run lasted nearly a year and a half. People started treating high prices as the new normal.
But I always knew the downturn was coming. The real issue is how polarized the narrative becomes. When prices rise, it’s “a new paradigm.” When they fall, it’s “fundamental failure.” The truth is almost always somewhere in between.
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Market downturns are useful — they expose unsustainable models. During bull markets, even flawed systems can appear successful because new capital keeps flowing in. Look at Terra: a house of cards built on leverage and unrealistic yields. When the music stops, those structures collapse.
The same applies more subtly to protocol funding. Teams expand during euphoria, but when prices drop, revenue dries up. My advice? Study history. Think long-term. Avoid the emotional rollercoaster.
The Long-Term Outlook: From Volatility to Stability
N.S.: Bitcoin’s price cycles seem to follow a pattern — each boom brings lower percentage gains than the last. Is adoption plateauing? Are returns settling into gold-like territory?
V.B.: I believe that in the medium to long term, crypto volatility will stabilize to levels comparable to gold or equities. The key question isn’t if — it’s at what price level.
Early volatility was driven by existential uncertainty. In 2011, Bitcoin dropped from $31 to $2 — people genuinely questioned whether it would survive. By 2017, the question shifted to mainstream legitimacy. Today, we’re much further along, but uncertainty persists.
By 2040, if crypto is embedded in key niches — as digital gold, a resilient financial layer, or “financial Linux” — its extinction or total dominance becomes far less likely. Individual events will have diminishing impact.
Mathematically speaking, crypto prices are bounded — they can’t exceed global wealth, nor fall to zero permanently. High volatility persists within this range until market behavior becomes predictable enough that buying low and selling high becomes a near-certain arbitrage strategy.
Energy Use and Security: The PoW vs. PoS Debate
N.S.: Bitcoin’s energy consumption scales with its price — unlike stocks or real estate. Doesn’t this create a structural drag on its value?
V.B.: It’s crucial to separate supply mechanics from value creation. Bitcoin’s issuance is fixed: 6.25 BTC every 10 minutes now, halving to 3.125 around 2024. This schedule is independent of price or hash rate.
So, no — mining doesn’t “support” Bitcoin’s value. It secures the network, but at a massive environmental cost. And eventually, Bitcoin will face a security challenge: when block rewards approach zero, it must rely solely on transaction fees.
Currently, Bitcoin collects about $300,000 in daily fees — stagnant for years. Ethereum, by supporting real applications, generates far more fee revenue relative to its size.
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This is why Ethereum’s shift to Proof-of-Stake (PoS) was so critical.
Why Proof-of-Stake Offers Superior Security
N.S.: You’ve said PoS is more secure than Proof-of-Work (PoW). How?
V.B.: Security isn’t just about cost — it’s about security per dollar spent. PoS delivers roughly 20 times more security per dollar than PoW.
Here’s why: in PoW, both entry and ongoing costs are high (hardware, electricity). In PoS, ongoing costs are low (running a node), but entry cost is high (staking large amounts of ETH).
Crucially, security depends only on entry cost — that’s what an attacker must pay. So a system with low ongoing costs but high entry barriers (like PoS) is more efficient.
Moreover, PoS enables targeted responses to attacks: malicious validators can be slashed, losing their entire stake. In PoW, the only defense is a hard fork that invalidates existing hardware — a far more disruptive process.
Bitcoin’s reliance on PoW raises concerns. If its market cap hits $5 trillion but an attack costs only $5 billion, that’s a systemic vulnerability.
Debunking Myths About Proof-of-Stake
N.S.: Critics argue PoS could lead to plutocracy — large stakeholders controlling the network. Others miss the miner incentive layer in PoW.
V.B.: One common concern is “costless simulation” — an attacker could recreate an alternate blockchain using old private keys. But PoS solves this with weak subjectivity: nodes must occasionally sync with trusted sources to verify the correct chain.
This isn’t a flaw — we already rely on trusted sources for software updates. And convincing thousands of users that every recent block hash is fake? Practically impossible.
Another myth: PoS = governance by stakers. No. Consensus ≠ governance. Validators don’t make rules; they enforce them. Protocol changes happen through community processes — BIPs, EIPs, developer coordination.
Miners in Bitcoin have limited governance power too — the 2017 block size war proved that.
As for centralization: yes, staking pools create pressure. But Ethereum’s upcoming withdrawal functionality will improve liquidity and flexibility.
And let’s be honest — PoW mining isn’t as decentralized as it once was. Large mining farms are often tied to governments. The romantic era of home mining is over.
Rethinking Blockchain Governance
N.S.: Governance feels like one of crypto’s most promising yet underdeveloped areas — enabling borderless, fluid cooperation without traditional corporate structures.
V.B.: Blockchains are unique hybrids. They have tokens like companies, self-sovereignty like nations, transparency like open-source projects, and passionate followings like religions.
But they’re not any one of these things.
They enable forking — a powerful check on authority. If a community disagrees with a protocol’s direction, it can split and create its own chain. But with billions at stake, forking is more like nuclear deterrence than routine governance.
Bitcoin and Ethereum both avoid formal governance structures. No single entity decides what changes are valid. Core developers coordinate, but real decisions require broad consensus — especially for philosophical shifts like hard forks or consensus upgrades.
This “tyranny of structurelessness” works better than it looks. Small teams handle technical details; big decisions demand wide agreement.
But on-chain, token-based governance? That model is failing.
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When governance becomes an auction — where the highest bidder wins — only the wealthy have power. This leads to extractive behavior and rapid collapse.
The future lies in multi-stakeholder governance: representing users, contributors, and communities — not just token holders. Projects like Optimism use non-transferable “citizenship” tokens to reward participation over speculation.
We’re still early. But the direction is clear: less financialization, more fairness.
Can Crypto Build a “Startup Society”?
N.S.: Could crypto enable new forms of human organization — “startup societies” as Balaji Srinivasan calls them?
V.B.: Today’s blockchain communities aren’t deep enough to form true network states. They rely on light participation — a few core devs working remotely in regular cities.
A real startup society demands sacrifice: moving to unconventional places, building infrastructure from scratch. That requires a strong moral narrative.
In 2009–2014, crypto had that: a continuation of digital freedom movements like PGP, BitTorrent, Tor, WikiLeaks, and Snowden. That ethos united people willing to take real risks.
Today’s ecosystem is broader but thinner. Ethereum has millions of users — but also deep ideological divides (“woke” vs “anti-woke,” international tensions). We unite against censorship, but not enough to form a nation-like entity.
Attempts to build local crypto communities often fail because they emphasize low taxes — a poor filter for attracting meaningful contributors. Network effects depend on quality, not just cost savings.
True innovation lies in rethinking ownership: less emphasis on land and property, more on economic alignment through community tokens or experimental models like Harberger tax.
But symbolism comes first. Practical utility follows.
The Role of Founders in Decentralized Ecosystems
N.S.: You’re often seen as Ethereum’s face. Is your role overstated?
V.B.: I’ve always wanted my influence to decrease as others step up — and that’s happening.
In 2015, I did 80% of the research and wrote most of the code. By 2020, I was down to about a third of research work and minimal coding.
Now, even high-level theoretical work is increasingly shared. Polynya leads on L2 scalability. Flashbots drives MEV research. Barry Whitehat and Brian Gu advance zero-knowledge proofs. Justin and Dankrad have become independent thought leaders.
This decentralization of leadership is exactly what we need.
Looking Ahead: A Future Taking Shape
The most exciting thing isn’t any single project — it’s how ideas are converging.
Technologically, Ethereum’s Merge has unlocked a new era of scalability, privacy, and usability.
Philosophically, we’re reimagining organizations, economies, and democracy itself.
Beyond crypto, advances in AI and biotech are reshaping our world — sometimes too fast.
But now, in 2025, crypto feels less speculative. Governments and institutions are adopting it not just as an asset class, but as infrastructure.
The future is still unwritten — but for the first time, we can begin to see its contours clearly.
Frequently Asked Questions (FAQ)
Q: What is the main advantage of Proof-of-Stake over Proof-of-Work?
A: PoS offers significantly higher security per dollar spent, consumes far less energy, and allows for faster recovery from attacks through validator slashing.
Q: Why do crypto markets keep crashing?
A: Crypto is still maturing. Each cycle reveals unsustainable models built on hype and leverage rather than real utility. Downturns help separate innovation from speculation.
Q: Can blockchain governance be truly decentralized?
A: Yes — but not through token voting alone. Sustainable governance requires multi-stakeholder models that represent users and contributors beyond financial stakes.
Q: Is Bitcoin secure in the long term?
A: Its reliance on transaction fees for security poses risks. If fees don’t scale with market cap, Bitcoin could become vulnerable to low-cost attacks despite its current dominance.
Q: Will Ethereum replace traditional financial systems?
A: Not fully — but it can serve as a resilient, transparent layer for specific applications like DeFi, identity, and digital ownership.
Q: Can crypto create new kinds of societies?
A: Potentially — but only with strong cultural foundations and shared values. Technical tools alone aren’t enough to build meaningful communities.
Core Keywords: Vitalik Buterin, Ethereum, Proof-of-Stake (PoS), blockchain governance, cryptocurrency security, decentralized society, market cycles