Ethereum co-founder Vitalik Buterin has a dream. He wants to make Ethereum cypherpunk again — harkening back to the foundational values of blockchain, like decentralization, open participation, censorship resistance and credible neutrality.
In the Dec. 28, 2023 post titled “Make Ethereum Cypherpunk Again,” Buterin argued that these concepts should shape not only the future of Ethereum but also the future of the internet as Web2 develops into Web3.
At the same time, Buterin lamented “degen [-erate] gamblers” on Ethereum who put their money into memecoins or nonfungible tokens (NFTs) in the hope of outsized financial rewards.
According to Buterin, degens “can be okay in moderate doses,” but “when they are the largest group using the chain on a large scale, this adjusts the public perception and the crypto space’s internal culture,” among other negatives.
If the Ethereum founder is to avoid what he sees as degeneracy and ever get closer to his dream, he has a long way to go. As Buterin says himself, “The only non-financial application that is actually being used at a large scale on-chain is ENS.”
While that’s a grand endorsement of ENS — the Ethereum Name Service — it’s not a fantastic record of achievement either. ENS launched in 2017, so by Buterin’s admission, not a single successful Ethereum project launch since then has met the standards he’s setting. That’s a fairly lamentable record.
With that being the case, can all of the blame really be laid at the feet of degens?
A single shining cypherpunk beacon
If the vast bulk of projects on Ethereum can either be classed as cypherpunk and not successful or as successful and not cypherpunk, then it is worth examining the supposed single exception to the rule: the Ethereum Name Service.
ENS is a domain naming service for the Ethereum blockchain. It allows a standard Ethereum address’s randomly created letters and words to be personalized into easily recognizable words or phrases, such as a name or a brand. As the internet has “.com,” Ethereum thusly has “.eth.”
Cointelegraph spoke with Nick Johnson, the founder and lead developer of the Ethereum Name Service, to find out what kind of forces might drive Ethereum’s cypherpunk renaissance.
As Johnson sees it, the cypherpunk idealogy -— which also drives the shift from Web2 to Web3 — will prove increasingly popular with the public as ordinary people become more familiar with centralization and its negative associations. He believes this is especially true for hot-button issues such as privacy:
“Web3 is poised to be a tangible reality as individuals see the impact of centralized technology on their lives, especially their data, and gradually recognize the inherent value in decentralized and credibly neutral technologies.”
Johnson pointed out that while the solutions take time to develop and emerge, “As blockchain technology advances, there is a decentralized alternative for every centralized option.”
Johnson said Buterin singled out ENS as unique among the whole Ethereum ecosystem because it brings “a true non-financial use case to Ethereum.”
Recent: Crypto community speculates about Bitcoin transfer to Satoshi’s genesis block
“The .eth naming system now stands as a foundational pillar within Web3’s architecture and is a gateway for Web2 companies scaling into Web3, proving we have slowly entered the transition to Web3. ENS believes in building an internet that adheres to the original ethos of Ethereum to foster inclusivity and self-sovereignty,” he concluded.
The transaction fee problem
Vitalik Buterin may lament the rise of “degeneracy” on Ethereum, but he sees high transaction fees, rather than individual users, as the main culprit and driver of the phenomenon.
Buterin writes, “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. But when transaction fees go to over $100, as they have during the peak of the bull markets, there is exactly one audience that remains willing to play — and in fact, because coin prices are going up and they’re getting richer, becomes even more willing to play: degen gamblers.”
If that point is accepted as true, there is a further argument to be made that the high cost of transactions on Ethereum is due to historical and current network limitations. A more charitable assessment may be that Ethereum is a victim of its own success, making it difficult to keep up. However you chose to phrase the matter, it boils down to an essential indisputable point: Ethereum is struggling to meet demand.
In 2022, Ethereum switched from proof-of-work consensus to proof-of-stake in a bid to improve throughput and provide a future platform for increased scalability.
But even with Ethereum’s consensus change, much work remains. The network currently processes 30 transactions per second or lower. The stated goal is to reach anywhere up to 100,000 transactions per second.
Ethereum can do it with time
The road to a cypherpunk Ethereum may be long, but some have confidence that the network is on the right path.
Barney Mannerings, co-founder of the Vega Protocol decentralized exchange, believes that Buterin can succeed in making Ethereum a more cypherpunk network, but “The caveat is that it remains to be seen how big the market for this is and how much adoption can be gained.”
What founders envisage and what the market responds to do not always perfectly align.
Mannerings told Cointelegraph that he sees a parallel with end-to-end encryption for messaging, saying that cypherpunks “fought for strongly end-to-end encrypted communications for years. Initially, they succeeded, technically, with the likes of Phil Zimmernan’s PGP [Pretty Good Privacy], but this has always suffered from a bad UX and low adoption — a lack of ‘product market fit.’”
Recent: 100 days out: What the Bitcoin halving means after BTC ETF approvals
Mannerings says it wasn’t until later, when Signal arrived with its improved user experience (UX), that the concept fared better. Mainstream messaging apps such as WhatsApp now offer encryption but with some compromises.
“I expect the same to happen here,” said Mannerings. “It will be easier to technically create and disseminate the tools and building blocks of Vitalik’s cypherpunk dream than it will be to get everyone using them, and for these building blocks to filter through to the real world in a big way could take decades.”
That’s not to make an argument against the attempt. In fact, as Mannerings points out, “I think it is a strong vision and one worth building toward and fighting for, and I think Ethereum is well placed to lead the charge from a position of strength, with an aligned community and ecosystem.”
