Technology is changing a huge part of our lives. Yet in some areas it stays on the sidelines and never quite catches up. It is clear that when it comes to how we are governed and to democracy, there are problems, and the solutions we know are outdated and inadequate for today. Before long, artificial intelligence will probably enter the paradigm too, as has already been discussed. But in the meantime, shouldn't we try to change things ourselves, as people, with the help of the technologies we already have? For example, through a much-hyped field like blockchain…

It could make electronic voting, such a contentious subject in our part of the world, completely transparent. And on the other hand, it holds the potential for a far more drastic change: blockchain democracy. A way of making the decisions that concern society in a very unexpected, yet logical way.

These days we talk about nothing but artificial intelligence, while another of the big trends is developing in the shadows… Is blockchain the next step in the way we organize society? And what does the idea have to do with the ancient oracles?

Pyramids, Pharaohs

We will have a currency that exists only in some algorithm and in virtual blocks of data. Works of art will be sold in imaginary form, so that one day we may own something that burned long ago and yet is worth billions. Or something that exists only virtually…

A few years ago these sentences would have sounded like science fiction; today they are plain reality. Blockchain technology has posed serious challenges to our common sense and has made good on many of them, turning them into everyday life.

Cryptocurrencies and NFTs are ever larger phenomena. They have proven that they have their uses in the social order and the financial system, and that they have yet to unfold their potential in other directions.

Blockchain technologies hold many more ideas with the potential to one day match their success in finance. Of course, some will succeed and others will turn out to be hollow daydreams. Still, it is worth looking beyond. Is the idea of a democracy based on blockchain too ambitious, too abstract, too impossible?

Deus ex Machina

Electronic voting is a painfully familiar topic for idle chatter in our democratic latitudes, and it has recently surfaced yet again. Let us set aside the argument that people are scared of machines and therefore don't go to vote. I don't think anyone today is scared of ATMs.

And yet the question of security and trust will always be there. The god from the machine will look more or less risky to the average voter, and to some degree to people in tech circles as well. A small doubt will always creep in about what happens between entering our vote and the final result.

And this is exactly the first point where it is worth seeking blockchain's help. First of all, what is this technology?

A way of achieving decentralization and traceability. An algorithm through which everyone involved receives information about a transaction and can verify and trace it. It stores, in blocks of data that every participant can access, all the previous information, which can be logically reconstructed beyond dispute.

It is no accident that it is called what it is. We are simply talking about a “chain of blocks” of information, to which new ones are added without the previous ones being changed in any way. Each new block becomes the little padlock that locks the one before it.

And if the system works so well for transactions of enormous financial scale… what about the possibility of casting our vote through it? A vote that stays anonymous and yet lets us trace, without error or doubt, how it was counted.

O Muse!

Have you ever thought how absurd it is that, at a time when we can pay with a single click, we wait for days for votes to be tallied from smudged protocols? And on top of that, it happens under the argument that this way is safer. To me it sounds safer to ask some prophet…, but, pun aside, we will get to that idea shortly.

Today blockchain protocols are used even by farmers in China, so that the code on every egg can trace its full history. So that one knows how the hen was raised and when the egg was laid, and that is good for the farmers because it drives up the price.

It is downright strange that the idea of using this kind of traceability in ordinary democratic processes still hasn't broken through. The attempts have been rather timid. Such systems are clearly conservative, and we don't need to resort to the usual conspiracy questions about how perhaps not every politician would welcome such traceability. Assuming that would mean crediting them with too much depth of vision, foresight and insight, which, used to Bulgarian standards as we are, we can hardly attribute to them.

Trojan Horse

Several pilot projects have been carried out in the United States. The first elections involving blockchain were in West Virginia in 2018, followed by Oregon. Small control groups were allowed to vote this way. Subsequent analyses by MIT scientists showed there had been security problems. Nobody claims the technology is perfect, but the more serious experiments in this area in the following years fell victim to the issues of the day.

Yet precisely those issues—Covid and the war—only showed once again that democracy needs its next steps. It needs trust restored.

Speaking of traceability, another sphere where blockchain could certainly be useful from a political point of view is the media. There is no need to mention the flaws in the way we get our information today—it is one of the constant, big themes of Digital Stories, and each of you has experience of it from your daily encounters.

Cassandra

Today manipulation is easier than ever because of the misleadingly enormous volume of information. A news story, for example, can simply vanish; a politician can quickly sweep under the rug a forecast that turned out to be wrong.

In blockchain that never happens; there, manuscripts don't burn. Alas, globally the field of media working with this kind of technology remains surprisingly empty, but in my view, sooner or later an ambitious enough startup will appear and draw attention.

Because in a blockchain-based media outlet nothing can be hidden, and it is always clear who said what and when. And on the basis of all that, anyone can make their own analysis of why they said it and how the words look from the distance of time—whether they have acquired patina or mold.

Swiss Army Knife

With everything listed so far, blockchain makes it possible to take one more big step. And it is not a continuation of or an alternative to democracy, but rather a return a few steps back, to its authentic form.

Today politicians—and here the collective noun can be used boldly—do not believe that the people are the ones who can make decisions. In almost all modern states, regardless of their civilizational differences, representative democracy reigns. Contrary to the birth of the idea among the ancient Athenians, we delegate to members of parliament and ministers the task of deciding for us. Then we punish them with elections or protests if they fail.

In most countries, referendums are just one more weapon politicians use to avoid doing what the majority expects of them. It is enough to mention the Bulgarian experience, where results that were unambiguous in both cases were not implemented even by the very political forces that had initiated and championed them.

Yes, the familiar exception is Switzerland, known for its referendums… Also for its advanced economic development and its neutrality in every kind of conflict. Might these be factors that complement each other in a continuum of cause and effect?

Couldn't technological conveniences allow us to vote more often on important decisions? Wouldn't that make more sense than liking and hating online?

That Ruinous Wrath of Achilles, Son of Peleus

So, I hope you are by now convinced of the many possibilities that even just one of the most modern technologies, blockchain, offers for the way our society is organized. If we add other fields to the paradigm, artificial intelligence for instance, it is downright strange that today there are no particularly popular philosophers, science communicators or scientists proposing a new political paradigm. There is hardly any dispute that we need one, in one way or another.

“Democracy is the worst form of government, except for all those other forms that have been tried,” you know the popular Churchill quote. So what, should we stop trying? Resign ourselves to the conditions staying the same, even though the times change and change us in many directions?

But that is not in human nature, which needs utopias in order to move forward. Could it be that democracy itself is capable of development? That it needs a breath of fresh air?

Thus Spoke Zarathustra

Which leaves us with one futuristic but very interesting idea. Yes, the famous oracles are something rather advanced, but, as we said, in the blockchain world such labels change quickly.

What would happen if elections became not a right or a duty, as they are today, but a source of investment, even of betting? The idea of DAO democracy belongs to the economics professor Robin Hanson and the creator of Ethereum, Vitalik Buterin.

What is a DAO? The next step in the development of blockchain. As you may know, in the East, Dao is the name of the principle of the way that should lead us forward. Here the abbreviation stands for “decentralized autonomous organization,” the kind of systems that blockchain allows and that Ethereum made possible in the fullest sense.

These are companies, organizations or software that embody the principle of decentralization precisely on the basis that information once entered cannot be changed. How does that connect with the idea of democracy? With a little help from… game theory.

Prediction markets are used in gambling, but they are also an important principle of stock exchanges, and something we encounter every day in our lives.

Statistical studies prove that sports betting odds predict the outcome of a given contest more accurately than the opinions of leading experts. Bets on who will become president of the United States are very often more precise than the polls. The simple explanation is that bettors ask around, take an interest, add their own experience and point of view. It is not the kebapche—the grilled minced-meat roll handed out at Bulgarian campaign rallies—nor the star sign or the smile of the candidate, but direct profit that motivates them to decide whom to back.

Could Hector Have Escaped His Death?

An impressive example of “the wisdom of crowds” comes from the following experiment. A jar filled with a huge number of candies is shown to 100 people, who are asked to guess the count. Then the results are averaged: 4,515. Astonishing! There are 4,510 candies, and the estimate is closer than that of any individual participant.

Which brings us to the idea of a prediction market—say, on who will win the next match between Levski and CSKA, Sofia's two great rival football clubs. Bonds are issued at 1 lev (about 55 cents) and sold to each participant, and 2 leva are paid out after the match only to those who guessed right. Very soon the price of the bond will show the real chances of the two teams. And later on: which participants are better at their forecasts.

In recent years, experimental polls like this have been run on questions such as whether the next SpaceX rocket launch will succeed or how the price of ether will change. And the results predict the actual course of events quite accurately.

DAO democracy combines blockchain and decentralization, uses prediction markets and gathers the opinions of citizens.

The majority, of course, tends to underestimate certain risks, which is why it is important to somehow add the opinion of experts as well.

We were supposedly just introducing the topic, and only now have we reached those oracles we started with.

Nostradamus

We return to Ancient Greece, once again to the cradle of democracy, as the popular cliché goes. What exactly the Oracle of Delphi was is still debated, but rulers from all over the known world came to that temple seeking prophecies. And not random ideas, but opinions based on impartiality.

The Athenians did it too, on matters they could not resolve themselves through debate. And on matters where they believed they were too biased.

This is exactly what the idea of prophets in blockchain democracy rests on. They are external sources of information to be included in the system built on the technology. Additional authorities, objective or subjective, that would oversee the processes or at least reinforce them with information.

Oracles can be applied in many different ways. They could even take the form of simple ethical frameworks that block certain decisions. Of course, we arrive once again at the eternal question of who, then, will guard us from the guards.

Kebapchain

So, the simplest version of DAO democracy is to pose the question “With which party in power could incomes rise by 20 percent by the end of its term?” and, once again, pay out the correct bets afterward. And let that replace the elections.

Then buying votes becomes a civic duty. People don't vote out of sympathy; the reasonable approach is rewarded. Even if a candidate looks good to you, you will vote not for them but for the one you think will get the job done.

Another proposal: votes could carry different weight based on various factors such as education… or some people could simply take part with larger sums. Yes, but here we run up against equality and universal suffrage, one of humanity's greatest achievements.

It is also important to choose the questions very carefully. If, for example, it turns out we are asking whether to use nuclear weapons, and the objective indicators say exactly that…

Yes, this topic is complex and deep, and every small change carries big risks. And yet the future is coming, even when we don't want it or aren't ready for it. And we all deserve a future in which we are prouder of our politicians and of the way we are governed…

– In recent years blockchain has been a roller coaster. People are no longer talking about a crypto winter but about a whole Ice Age. Why did it come to this?

– We really are entering a fundamentally different investment era. And we are still not sure what that means or what the differences will be. My guess is that

the crypto winter will end at the beginning of 2023, or at least in the first half of the year,

and lasting growth will begin. But I'm not convinced the next spring and summer will be like the ones we have seen—they may be shorter. The current global situation with inflation and interest rates hasn't happened in 40 years, and once this problem surfaces, it doesn't go away quickly. Usually

it takes about a decade for debt levels to clear and for inflation to be brought back to some kind of normal.

I expect the next decade to be more inflationary, and under such conditions crypto will be driven far more by fundamentals, by actual use, than by the speculative forces that have driven it so far.

So it's not exactly an ice age, but we are entering a different regime. And that holds for everyone: this decade will have different dynamics for every type of asset. The investments that did best from 2008 to 2021 probably won't perform nearly as well—American stocks, and especially those of the big tech companies.

– Who are the favorites to take their place?

– It's hard for me to say, but it looks as though the real economy, which has been neglected for quite a while, could do much better—commodities and energy companies, for example.

In times of inflation, energy is what compensates best. Better than gold, real estate or other assets. It seems reasonable to me to hedge with energy sources. Although oil and gas will gradually lose influence, we are still far from that moment. Oil, gas and probably uranium will be the winning investments.

Oil and uranium can be bought directly through various financial instruments; gas can't. But the alternative is companies that extract it, or others that deal with infrastructure—pipelines, liquefied gas.

– But IT is hardly going to sink. More and more areas depend on it, so it can't lose its appeal, can it?

– I agree, but right now the valuations of IT projects are already very high. Apple was trading at 20 times earnings—the company's price divided by its annual profit came to 20, which is great. But in inflationary times like these, valuations drop drastically, in this case to below 10. There are exceptions, of course. If the average for all companies in the S&P 500 index is 8, a company like Tesla will hold at 15, although it was at 80 and is now at 40. It will most likely keep growing, but the premium the market gives it over the others will be lower.

My personal strategy is to balance my portfolio between tech projects I can see developing and making sense, like cryptocurrencies, Tesla and Palantir, and commodities, above all energy. That way, if things turn out the way I expect during this inflationary decade, I'll have a bit of both.

Technology brings progress, but the thing of the moment is energy and commodities.

With high inflation, energy will be high and the valuations of tech projects will be suppressed. And if energy and commodities are low, the other half of the portfolio will take off. I think the two halves give a good balance. Unless years of recession are coming—then there's a chance both will go down.

– Then 2022 came, the war began, people were looking for unconventional forms of investment, and many thought a boom was coming in the blockchain world, which had just become fashionable. Exactly the opposite happened. Why?

– War brings instability, and people really do look for alternative ways to save. If you're in Ukraine or Russia and want independence, there are no easier financial means than cryptocurrencies. Gold gets detected at the border, bank transfers can be stopped, cash gets detected too. Crypto is the only thing you can access instantly from anywhere on the planet, just by memorizing a few phrases.

In my view there isn't much of a slump at the moment; it's more in the price.

We should separate the two indicators—the fundamentals, the actual use of cryptocurrencies, and their price.

Sometimes the two diverge. The fundamentals are moving smoothly upward even now and aren't that volatile, while the price depends on 1,000 other factors: market mood, the risks people have taken on, whether there's an appetite.

We had zero or negative interest rates, and people were looking for returns. To get anything decent, they raised their risk tolerance and turned to investments that would pay off somewhere far on the horizon. In the short term, Bitcoin and crypto projects bring less profit. So

the cooling of monetary policy led to an outflow of interest from all kinds of longer-term and riskier assets. Not just cryptocurrencies.

– Do you think all the big cryptocurrencies will survive the current winter?

– No, no! That's the whole point of winter—those that aren't healthy die.

Or, as is the case with crypto, they don't die but gradually fade—when the next spring comes, they don't wake up and never reach their old peaks.

I read a study saying that only 3 or 4 of the 20,000 cryptocurrencies that have been tried set a new record against Bitcoin in 2021 compared with what they had in the previous cycle in 2017. In other words, they gradually fade. This industry changes very fast—literally within 6 months you have a completely different ecosystem. That's why it's important to keep updating your knowledge and preferences. To see what's relevant and to redirect your portfolio.

– And which directions do you think are relevant right now?

– We're at a stage where

you should hold mainly Bitcoin and Ethereum until the winter passes.

When spring comes—meaning Bitcoin gathers a bit of momentum—you can move on to whatever is relevant at that point.

If I had to buy today, I'd choose cryptocurrencies that compete with Ethereum, layer-one blockchains. They're the ones preferred by tech companies from the real world. Solana took a heavy blow from the collapse of FTX, and it's unclear whether it will lose some of its edge. Still, for now, Solana and Polygon have caught a tailwind.

There are a number of other interesting projects too. Helium, for example, builds networks for the Internet of Things—independent ways of connecting to the internet, a wireless network that isn't tied to the big providers.

Another interesting direction is rendering—using graphics cards to create all sorts of graphics, which are used, for instance, by the AI technologies that generate images. With a blockchain system you can organize people who own graphics cards, the way the “miners” were organized. You give them work and pay them in those tokens. If this kind of AI starts making videos and animations, I expect very serious demand in that direction.

– In the beginning, when blockchain appeared, there was great enthusiasm that the technology would be useful in many areas, for tracking products, for example. But it has remained mostly in the world of finance.

– From the very start I didn't like the idea of applying it to the supply chain. There's nothing particularly innovative about it; the person scanning the goods can always make a mistake, and that's that.

The most valuable thing about blockchain is that some kind of value can be transferred, and that this can be neutral and independent.

That's where things are heading. Decentralized social networks are being built; people have been talking about this for quite a while. Farcaster, for example, is building a protocol based on separate networks that are like subgroups. As a user, wherever you join, you keep your history, your audience, your users, your rewards.

But blockchain remains primarily a tool for easily transferring value. Whether that value is financial or not doesn't really matter.

– You say that once 15 percent of users believe in this technology, it's certain that it will irreversibly change the financial world. Are we there yet?

– I think it has already happened. There were recent studies on what percentage of all users own cryptocurrencies. In some countries, Turkey for instance, it had reached 25 percent, but globally it was about 10 percent of users.

I think we've reached the point of no return.

Besides, the biggest risk of slowing down or killing the crypto trend is a coordinated global ban—not just in Europe, the US or China. At the moment that seems extremely unlikely to me, because coordination in the world has fallen to a very low level.

– I wouldn't be surprised if in Bulgaria, too, it's over 10 percent of internet users. But most people see cryptocurrencies as a lottery, as a super-risky investment.

– I've noticed that people see them that way too. But owning Bitcoin right now, especially at these prices, doesn't strike me as risky at all. What could happen?

– Its price could keep falling…

– Yes, but how much further can it fall? It won't go to zero. Any investment can fall further, including apartments in Sofia, but the upside potential is still quite large.

People keep making one big mistake—they hope to put 500 euros into some coin nobody's heard of and make 50,000 euros. Everyone is on the lookout for that; they buy Dogecoin, Shiba Inu, all kinds of weird cryptocurrencies, just hoping they'll go up 100 or 200 times. The chance of that happening is extremely small, close to zero, especially in times like these. Somewhere around the start of the euphoric phase you might try playing the lottery—there's some sense in it—but right now it's absurd.

If you want to win, you need a different approach. If the goal is 50,000 euros, rather than buying junk you'd be better off buying Bitcoin at $10,000 or $20,000. The chance of it tripling within 5 years looks to me like 98 percent.

But most people prefer to bet on a 1 percent chance. In terms of probability, that makes no sense at all.

We humans are bad intuitive statisticians, that's long been known, and that's why gambling thrives.

No one who thinks rationally would gamble; even insurance, statistically speaking, would shrink if people were good at statistics.

– What matters most for succeeding in the crypto world—intuition, financial or technological knowledge, following everything? Or some combination of all of that?

– There are different approaches, and each requires different qualities. You can be a lottery player: if you get in at the right time and pick 10 risky projects, you have a chance of hitting the jackpot. But you need to know when the right time is.

You can be a passive player—buy the three most popular currencies and hold them without looking at the prices at all. If one drops out of the top 3, you swap it for the one that has come in. That requires completely different skills—being patient and stopping yourself every time you feel the urge to sell. It's very hard; you're constantly tempted.

Another option is to play the cycles. To discover new projects that make sense but that the market hasn't valued yet. You do this at times when there aren't many eyes looking in that direction. In the spring and summer of 2020, for example, many people weren't paying attention to crypto, and there was a period when Ethereum sat at around $300 for months, even though it already had tremendous fundamentals. Nobody had just thought of buying; people's attention was elsewhere.

I think times like that are coming again. In 2023, if you understand rendering and the need for it in general, you can get into that specific project and assess how big the market is. Judge whether there's a gap between how the market values it and its real value. But that takes concrete, specialized knowledge, which is hard to accumulate.

I was lucky at the moment I noticed the crypto industry and started investing. I came from a field where I'd worked with money my whole life, and with money outside the monetary system at that. I know the problems of the monetary system and I look for ways to solve them—gold is one of them. So I grasped Bitcoin intuitively; it's simply within my area of competence. If a doctor, say, took it up, it would take a lot of time and effort to figure out what this thing is, why it's even possible and why it makes sense.

– Every technology reaches its winter. Right now artificial intelligence is all the rage, and I simply can't imagine how its winter could come.

– AI has already been through a winter, but where its plateau will be, we don't know. Chatbots and image generation help us, but there are more impressive things too. I watched the latest news from Tesla—the cars already drive very well, in the city, in the dark, in the rain. They still make mistakes, but I suppose within a few years that will be ironed out too. It has such an enormous effect on the economy, it brings such productivity, it's simply amazing.

If cars drive themselves, it would make traveling much more pleasant. Now you try to live close to everything; later that will matter less—we'll be able to talk, sleep and work while we travel. It will unclog cities. I think it's a fundamental change in life; it will affect real estate and lifestyle. It will free up a lot of jobs.

– Autonomous driving really does seem very close. And we can only guess what it will lead to in our lives.

– Yes, there's no way to know. Look, these days we go to the gym. If we'd told someone 100 years ago that we'd build halls where we deliberately lift heavy things because otherwise we don't, it would have sounded absurd to them. It was built into people's lives, and today we don't question it. Doing some pointless physical labor to stay healthy, simply because

our DNA was built on it over millions of years, and now we've reached the stage where there's no need. The same will happen with more and more activities.

Look, Tesla is making a home robot to do all the chores in the house. Suddenly we start wondering what we'll do with all that time. Musk says an era of abundance is coming. A nice concept, but it brings a new kind of problem on the horizon. When it's very easy to be warm, to have food and your basic needs met, you start asking yourself: “Why am I here?” “How can I be happy?” “How can I be at peace with the people around me?” “What is the meaning of life, and what do I contribute?”…

– Absolutely! And those are some of the very topics and questions Digital Stories exists for…

– What won you over to blockchain technologies?

– I first noticed Bitcoin in 2014. I started reading about what it was all about, and it made a very strong impression on me, above all from a technical point of view. I saw that Bitcoin solved a technical problem that had had no solution until then. Namely: how to create some kind of digital uniqueness—an asset or a unit of information that cannot be copied the way a flash drive or a file can. That makes it possible to build decentralized assets.

That's when I decided I had to be part of this ecosystem. I bought my first bitcoins and started “playing around.”

Quite unsuccessfully—I lost money, but I kept believing the technology made sense

and solved quite a few real problems.

In 2017 a chance came up to lead a blockchain project, and I decided it was a good opportunity to get into this more seriously. I spent two and a half years there and went quite deep into the Ethereum ecosystem. Just as I decided to leave the company, decentralized finance exploded. Lots of projects appeared that largely copy the traditional banking system, only in the decentralized world. I found myself in the right place at the right time…

– Let's say that when you were getting into it, this technology was booming, and then came the crypto winter. Have we reached a point where we can look at it more soberly, where things are more real?

– I've been through several crypto winters, several full cycles. I tell a lot of people this:

don't expect to get rich in the first cycle you spend in the crypto world,

if your goal is investment. I've seen it happen to many other people, and it happened to me—the first time I got in, I lost money. But afterwards I decided to hold on to those crypto assets. I told myself: I've learned my lesson, I'll leave them in my wallet and won't look at them for a few years.

Gradually you get a feel for the logic and the trends. Besides, with every cycle things settle down more. When I got in back in 2014, to buy crypto you had to go through some super-shady exchanges that were later shut down by the FBI. You'd send money abroad with no certainty you'd get anything back. I remember once sending money to a bank in Mongolia. Simply absurd! You send it off and hope something will happen.

Now it's different. We have exchanges like Binance and Coinbase, and even banks in the EU work with these exchanges. If you decide to, you can buy for really huge sums.

Liquidity is improving too. Some people say: “Oh, if only I'd bought $1,000 worth in 2009…” Come on, man, back then it was impossible—there was no one to buy from, there simply was no liquidity in the market.

– And then came 2017, which I at least associate with the term “crypto winter.”

– 2017 was the big “bear market”. Projects pop up and raise seed funding… but they don't really have any working product. Everything is literally on a sheet of paper. Naturally, a large percentage of those projects failed. If you have 1,000 companies at the idea stage, most likely 990 of them will fail, and the remaining 10 will be the real ones that build something.

I compare that period to 2000–2008—the dot-com bubble. Everyone knew the internet would change the world, but nobody knew exactly how. And a huge number of companies appeared with all kinds of ideas: we'll sell dog food over the internet.

Most of them failed, but out of all that chaos came Google, Amazon, Netflix and Facebook.

The period of turbulence was necessary so that starting capital could be poured into the ecosystem and we could see what the market actually was.

The same thing happened with blockchain, and it became clear that the real market is decentralized finance. We now have these systems on Ethereum that resemble the way banks work. There's a lot of liquidity in them, they've gathered a large number of users, and it's clear they're better than ordinary banks in many respects.

First we had normal banks, where you had to go to the counter for everything; then came online banking. And now the next stage has arrived—decentralized finance. Here's the question: if I get in now and buy into the top 10 projects by market capitalization, will I be rich in a year? Well, that's not at all clear—there's a risk prices will fall. If you get in now, don't expect to get rich within a year. You have to look at the crypto world as a long-term investment. Things move very fast, and it's not clear whether the companies most in demand right now will still be successful a year from now. I advise people who want to enter the crypto space to start with the big players like Bitcoin and Ethereum, because they're more predictable.

– But that's where the bigger profits are, because some of them are bound to take off, if we compare them with the Google, Amazon and Facebook you mentioned… The hard part is choosing among thousands of potential opportunities.

– That's true. The problem is that to make a genuinely informed decision, you have to read quite a lot. Even for me it's

very hard to keep up with absolutely everything happening in the crypto world right now, even though I do this full time.

To a large extent it's impossible to be fully informed about everything that's going on.

– Still, what's your advice for choosing?

– I think people should avoid the old projects that have no market application. There are things in the top 100 by capitalization that are absurd. Ethereum Classic, for example. It split off from Ethereum in 2016 and isn't really maintained—it's a dead project. The same goes for Bitcoin Gold.

In this ecosystem it's very hard to separate the noise from real information.

Because everyone is selling you whatever they themselves have bought. That's simply how the ecosystem is set up. That's why I advise people to look at the big ones like Bitcoin and Ethereum. Otherwise it's worth tracking how much money users spend to use a given ecosystem—you can see that on the site CryptoFees. That indicator is a sign that there's demand for the technology, and that there's a market.

Another important indicator is liquidity—how much money has been poured into the project. A valuable resource there is DefiLlama, which shows how much money is in each protocol. Another indicator is the number of addresses using the technology—you can see those on DappRadar, but bear in mind that these statistics can be very unreliable.

Liquidity and fees—in my view, those are the important indicators…

– And you keep your fingers crossed that tomorrow Musk will tweet something about that currency.

– Yes, that's the other thing. To me, currencies like Dogecoin and Shiba Inu are largely speculation. Many people will say: it's all speculation.

– I read you saying that Bitcoin will be the future equivalent of gold, because it's a limited resource with a large ecosystem, while Ethereum will in some way be the foundation of the new banking system. And that between them they essentially cover almost the entire need for decentralized finance.

– Yes, that's in a world where we imagine there's a single winner in each of these areas. I think there will be other technologies that take some market share from these applications. For example, it's not clear who will be the biggest rival in the Ethereum world—offering smart contracts, but with lower fees at the cost of less decentralization. Several projects are fighting for that—Solana, Fantom, Polygon. Competing with them are layer-two solutions, which offer lower fees on top of the Ethereum blockchain—those are Arbitrum and Optimism. Which of all these projects will be number 2 isn't clear at this stage. And from that point of view it's difficult if you decide to invest. All these projects have liquidity, they have users. And things are constantly changing.

– Until recently the big fad was mining—quite a few people set up workshops in their basements for it. Today there seems to be no practical point to that anymore?

– Generally, yes. I think next year Ethereum will switch to Proof-of-Stake, and Ethereum mining, which is done with graphics cards, will become largely pointless. To the joy of every gamer, graphics card prices will drop, and the market for this kind of digging will shrink very sharply.

At this stage there's not much point in getting into cryptocurrency mining. The profits are negligible, unless you have very, very cheap electricity.

– What will happen when the last Bitcoin is mined? They're a limited resource; at some point they'll simply run out, and maybe their price will explode?

– There's a lot of speculation about that. Right now Bitcoin provides a kind of subsidy to everyone who mines—for every block they get 2.5 bitcoins. At some point that subsidy will drop almost to zero, and it's that moment that worries me more. The idea is that the network will then be sustained by the fees people pay to use the blockchain.

There's no way a blockchain can be infinitely secure—there's always a theoretical amount of money that, if you had it, would let you attack the network and “break” it. How secure a blockchain is depends on how much money that would take; the term is “security budget.”

Personally, I'm skeptical that fees will be enough to guarantee a sufficiently high security budget, and that would endanger the whole blockchain. Of course, this will happen at least 20 to 30 years from now. There are many solutions that could avoid it—for example, a change in the consensus algorithm. I think over time, once we've seen Ethereum's transition, we'll see how well that technology really works. Another possible option is for Bitcoin to move onto Ethereum's consensus algorithm. That is, bitcoins would be transferred onto the Ethereum blockchain and take on its security budget.

All of this is one more example that

this ecosystem still has plenty of rough edges to smooth out before anyone can say it will be digital gold,

worth its price for a long time to come.

– In some ways the pandemic is speeding things up too. A few days ago I saw that the guy I buy tripe soup and kebapcheta (grilled minced-meat rolls) from has also opened a crypto wallet. For people who aren't prepared, is this approach more of a chance at incredible riches or a pyramid scheme?

– A sign that we're nearing the top of the market is when you get into a taxi and the driver tells you about the price of Dogecoin. I recently traveled abroad, and at the border they asked me what I do. When he found out, the customs officer replied: “Ah, I bought some Dogecoin and Shiba Inu, but the price has really dropped.”

That's usually a signal that the market is overheated,

and we went through one such moment this year, when Bitcoin reached $65,000 and then crashed by 50 percent. But now things are moving up again, and it's even reached a higher price. We'll see what happens. But when absolutely everyone starts talking about Bitcoin, that's the worst possible time to buy. And that's the dilemma I face. When the market overheats, an awful lot of people come to me asking what to buy. And when the market crashes, there's nobody.

– Actually, that's exactly the moment to buy.

– That's why I think it's important for people to get in and buy something with money they're prepared to lose and that won't keep them up at night.

If they wake up at night to check their wallet, they've invested too much,

and they need to cut back. First get into it, see it, feel how things move, go through one cycle.

That initial investment is your ticket to start paying attention to what's happening. And once you pay attention and follow the market, you'll acquire the skills you need to sense the right moment.

– Vitalik Buterin says that the most interesting applications of smart contracts are the ones even he hasn't thought of. Outside finance, which areas do you think have a big future for them?

– One, in my view, is gaming, the so-called “play to earn.” Someone installs Diablo, say, plays for 100 hours, collects some items, then stops. In this model we can integrate blockchain, and that way there'll be a market for all the items found and used there. A real market is created, and I think it has very big potential.

This is largely connected to NFTs. I think there will soon be another explosion in this area too—we're already seeing the first signs of it—in art and the way artists sell it. If a painter paints a picture, puts it in a gallery, it gets bought, and at some point its price skyrockets. The artist won't make anything from that. Now we have an alternative mechanism. The painting isn't transferred through some paper contract but through an NFT—a unit that lives on the blockchain and can be transferred between people. Then, whenever this token changes hands and a transaction takes place, the artist gets a certain percentage.

We're seeing many interesting experiments in this area. Some people bought a Banksy painting for $100,000, then made a video of themselves burning it in a park and created an NFT representing ownership of the painting.

The NFT sold for $300,000, even though the painting no longer physically existed.

The Mona Lisa is worth $200 million, and the only way to buy it is to pay that. But what would happen if we made an NFT representing it, then split it into 1 million pieces and put each on the market for $200?
Whoever holds the largest share could decide where the painting is exhibited. And at the same time it would let ordinary people like you and me own fine art, something that has survived through the centuries. Something whose price never really falls, but only rises over the centuries.

– Yes, but it's somehow counterintuitive. Every time I try to explain the principle to someone, I struggle—it's as if you're buying nothing.

– The question is what's behind it. We could argue that art as a whole is actually nothing. Because it doesn't create any kind of goods—you can't eat it, you can't drink it, it isn't a factory that produces something.

Art is simply a social construct,

people have decided that this painting is very beautiful. You can try it: open the Wikipedia article on the most expensive paintings in the world and see how many of them you recognize. Out of 20 paintings, I recognized two. Maybe I just don't understand art? But when I tried this experiment with other people too, I told myself: fine, there's obviously something here I just don't get. Obviously it's about some kind of social contract. That's what art is, and I think NFTs are a chance for it to move forward.

In Budapest, close to the bank of the Danube, there is a new statue—slightly kitschy, but interesting as an idea. It is a bust of a man “dressed” in a bronze hoodie. His face is polished so finely that when you step closer, you see… yourself.

The statue, as you may have heard, is of Satoshi Nakamoto, the mythical creator of bitcoin. Is every one of us Satoshi?

He may well be the greatest legend born of the digital age. But who really is the person who created the first blockchain network? Why did he hide from fame and from the billions that today would make him one of the richest people on the planet?

The story is so powerful, so intriguing and so thought-provoking that it deserves to be gathered in one place. And if the real creator of bitcoin is reading this… maybe he'll be moved and write to me. His fate, and everything that happened after he withdrew, is so bizarre that nothing would surprise me.

Let me hurry on—Netflix is surely already preparing a series on the subject.

Satoshi in Galoshes

This is one of the great stories of our time. Mentioned countless times, supposedly familiar, yet in truth full of nuance and promising to remain a mystery forever…

Satoshi Nakamoto and Banksy are the two hidden pop heroes of the digital age. Whoever unmasks them will make a fair amount of money… and will kill what little romance is left to stir the collective imagination.

Still, let's try. Let's approach it the way classic crime stories do. Let's step into the shoes of Sherlock Holmes (or his modern equivalent, Prosecutor Geshev—Ivan Geshev, Bulgaria's famously controversial chief prosecutor). We'll start with the incident itself and lay out all the circumstances. Then we'll look at the clues that Satoshi's admirers and the media around the world have gathered in recent years. Finally, we'll line up the suspects.

The Name of the Rose

It's 2009, and yet another alternative new platform appears online, promising that payments, banking and the financial world as a whole will never be the same. A certain Satoshi Nakamoto sends his colleague Hal Finney a little virtual money, which arrives where it should…

The first blockchain is up and running, and the first cryptocurrency—still the strongest today—is born: bitcoin. The system springs into motion, and a whole new technological world is born, the world of decentralized applications. In the years ahead, the price of the first cryptocurrency will erupt like nothing before it, bringing incredible returns to smart investors and speculators.

In fact, the story starts earlier. Work on the project officially began in 2007. A year later, the name we mention so often appeared online for the first time. In August, someone using the handle Satoshi Nakamoto created the website bitcoin.org through the service anonymousspeech.com, which allows the owner of a site to stay anonymous.

So here is our first clue. From the very beginning, whoever uses the pseudonym is determined to remain anonymous. In other words, the name itself was most likely chosen to carry symbolism (more on that in a moment); it isn't real, and the person using it has no wish whatsoever to step into the spotlight.

Digging In

In October 2008, a password-protected document went out under the same pseudonym to a select list of people. It briefly described what bitcoin would be, why the venture mattered, and how the architecture of what would become the first and hugely successful blockchain was built. Even back then, quite a few people were surprised that they were evidently being written to by a Japanese man with impeccable English. Online, across forums and various early ventures, something like a community had already formed, all looking in the same direction.

It was just waiting for the fuse that would light the bomb, and its name was… you know what.

On January 3, 2009, the first, genesis block of data was generated, laid at the foundation of the blockchain like the cornerstone of a house. With it came the first 50 bitcoins. Today that would be a good deal of money, but the very architecture of the system dooms them to stay in that first block forever, with no one able to buy or sell them.

At the heart of the project lie 30,000 lines of code, which over the following years will generate 21 million bitcoins. They are distributed through “mining,” and about 18.5 million of them have been “released” so far.

A Pizza Worth Billions

Just six days later, the first version of the core software was released, available for anyone to download and use. On January 12, 2009, the first transaction we mentioned took place: Satoshi sent bitcoins to his fellow enthusiast, the American programmer Hal Finney.

In February, the first exchange appeared. Back then it all looked like a game; even the greatest enthusiasts didn't truly believe that imaginary money locked inside some closed network would one day be worth real dollars.

The last important step was taken on May 22, 2010. A programmer from Florida offered 10,000 bitcoins to buy two pizzas, and a fellow programmer agreed to take the money and make the purchase. For the first time, bitcoin was used for a real payment. And the man who bought the pizzas paid for them with cryptocurrency that today would be worth about $700 million.

Let's hope the pizzas were tasty enough to be worth the price.

Over the following months, Satoshi wrote quite often in the forum of the core developers of the bitcoin blockchain. He discussed technical details, gave his opinion, worked on the software.

On April 23, Satoshi Nakamoto posted a reply to a question on the bitcoin forum bitcointalk.org, where he regularly discussed whatever issues came up. This time the topic was fairly routine: the risk of DDoS attacks on the network.

Then… he simply vanished. It soon became clear that he had entrusted the project to one of his close colleagues, Gavin Andresen, and to the rest of the like-minded crew.

Ten Little Bitcoins

It's time to look at the clues that have given generations of seekers of this mythical figure no peace.

In 2010, transactions multiplied and real money started flowing into the blockchain. Enthusiasm arrived. As someone aptly put it on one of the forums, a cult grew around the alchemist who, using the C++ language, had created the philosopher's stone, ready to turn computer code into gold.

You know what happens after every revolution: usually the first casualties are the idealists.

Some believe that fame and success came too suddenly for the person behind the pseudonym. The fact is that very soon after the blockchain's early triumphs, discontent began to pile up on the forums against this Satoshi, who was supposedly building a decentralized platform open to all, yet was himself the final authority on what happened to it.

At one point the situation was heading toward open revolt, with more and more malcontents ready to split off into their own subprojects, branches (or “forks”) of the main blockchain.

And, you see, Satoshi was a gentle soul who broke before the flaws of democracy—or so goes one of the explanations for his departure.

Bitcoin, Stay a While!

Well, if programmers were poets, that might sound plausible. Except that the messages of our hero with the Japanese name never stop radiating a sober attitude, an engineer's, technologist's view. And detachment.

A few more nuances are worth adding. The aforementioned Andresen claims that three days after the last post, on April 26, he received a letter from Satoshi handing over technical responsibility to him. Satoshi wrote: “I wish you'd stop talking about me as some mysterious shadowy figure; the press just turns bitcoin into some kind of pirate currency. Maybe instead it's worth talking about the open source project and giving credit to all the contributors, which would also motivate them.” He ended by saying it was time for him to move on to other things.

Soon a separate email arrived with all the important passwords needed to run the main site.

In June 2011, the same Gavin Andresen went to be questioned by the CIA, which he later admitted himself. Some believe he went to confess to a murder, to boast that he had completed his mission…

C-I-A-A-A!

All right, but if the CIA had foreseen what bitcoin would become at that stage, it hardly would have acted so “delicately.”

Let's move on with the clues.

In Japanese, the name is neither especially common nor borne by just one person. That's exactly the smartest approach if you're picking a pseudonym—you'd hardly settle for the Bulgarian John Smith, Ivan Ivanov, or for something as outlandish as Trandafor Genadiev.

According to the characters it is written with, “satoshi” means “clear thinking, wisdom,” “naka” is “inside,” but also “relationship,” and “moto” is “foundation, origin.”

Another “translation” holds that the name comes from Samsung-Toshiba Nakamichi-Motorola. Just don't ask me who Nakamichi are.

A Handsome, Perfectly Plump Man in His Prime

Yes, it sounds completely random, especially coming from a programmer who works on cryptography, doesn't it?

Incidentally, that's quite a big hint. Every analysis of bitcoin's core code shows that we really are dealing with a software engineer of great precision, with an almost paranoid avoidance of even the tiniest bug.

At the time he said he was 37, which means today he's pushing 50.

His English really is too good; he uses quite a few typically British expressions (such as “bloody hard” and “flat” for an apartment), but here and there he slips in American slang.

A very interesting detail: examining all of Satoshi's posts, a Swiss programmer noticed that not one of them was published between 5 a.m. and 11 a.m. GMT.

And one more charming hint. Just before he left, he deleted his name from the bitcoin software documentation, leaving a message that it was a shared creation and shared property.

The Billion-Dollar Boy

“If you don't believe me or don't get it, I don't have time to try to convince you, sorry,” Satoshi once wrote on the bitcoin forum.

Following the classic system of crime novels, let's say a little more about motives.

Why does it still matter today who hides behind the mythical pseudonym, even beyond the pop culture image that has formed slowly but irreversibly?

First of all, whoever he is, the person behind the pseudonym should be sitting on quite a lot of money. Estimates vary: some believe his bitcoin fortune is about $1 billion. Others put it at $55 billion.

Still others claim that he owns 5 percent of all the bitcoins that will ever be created. As you already know, most of them already exist, and the fewer remain, the higher, logically, their price will climb. So nothing prevents a Satoshi from appearing one day and turning out to be the richest person on the planet, and by a wide margin.

Or not appearing and still being exactly that—what do you say?

In an ironic twist of fate, his fellow developers decided to name “satoshi”… the smallest, tiniest, most minuscule copper penny in the currency's hierarchy that anyone can own. One satoshi is worth 0.00000001 bitcoin. A bit harsh, isn't it?

And so, it's not as if we haven't asked this already, but… who is Satoshi Nakamoto?

Hello, Finney!

Interestingly, it was only last November that the number one suspect turned out to be a man we've already mentioned: Hal Finney, the programmer who received the first bitcoin transaction. That was when information from correspondence between the two came to light.

Hal is a truly special figure for the blockchain movement. In bitcoin's early years, he did everything in his power to refine the platform, fix its flaws and popularize the enormous possibilities this technology offers.

Hal remained in the blockchain forever; he passed away in 2014.

So how come, just a few months ago, the media suddenly remembered that maybe he was good old Satoshi?

The answer is difficult.

A Finney View of the World

Shortly before his death, a Forbes journalist asked Hal Finney point-blank whether he was Satoshi Nakamoto. Hal flatly denied it. He even added: “I thought I was dealing with a young man of Japanese ancestry who was very, very smart and sharp. I've been lucky enough to know some amazing people in my life, and I recognized the signs right away.”

Hal certainly fits the profile we've sketched from the clues beautifully, which is why his name leads the speculation today. As early as 2003, he wrote that he had an idea for a decentralized online currency; he had the necessary knowledge and a broad vision. What's more, it would have been much easier for him to stage the first bitcoin transfer between two of his own crypto wallets himself at a time when things were technologically quite tense…

Finney died at just 58, of amyotrophic lateral sclerosis, Stephen Hawking's disease. If he was Satoshi… let's hope he took good care of the billions he truly earned.

Luckily, we can still ask the suspect himself for the truth. Yes, Hal Finney is no longer with us, but he had a peculiar attitude toward death and believed it could be defeated. The bitcoin pioneer was an advocate of cryonics and paid to have his body deep-frozen, so that one day, when technology improves, he could be thawed and revived. There—our problem is solved; we just have to wait until it gets that far and then ask him again…

Forgive the dark humor. I just think it's a bit impolite, years after his death, to suddenly pin it all on Hal, without enough new arguments and without him being able to take the floor and say what he thinks.

Confession Only

Meanwhile, there is one rather popular candidate who claims the “role” for himself. The Australian businessman Craig Steven Wright has long been saying that he is the famous figure, and he launches noisy lawsuits against anyone who disputes it. Yes, he “admits” he took on the role of bitcoin's creator together with another colleague, who is no longer among the living…

Then it turned out there were plenty of inconsistencies, and Craig earned the nickname Faketoshi, or “fake Satoshi.” In the meantime he tried to patent the core documents related to bitcoin, to which the court replied that there was no way to verify a person's connection to an online pseudonym.

Oh, by the way, I skipped something. Just when bitcoin became insanely popular and everyone who had heard of it was biting their nails for not buying when the time was right… Satoshi Nakamoto was actually found!

Wow, how simple—so all I had to do was get you to read this far, and the mystery has been solved all along? Almost.

The Picture of Dorian… Nakamoto

In 2014, journalists from the American magazine Newsweek dropped the bombshell that they had found him! What's more, his name was… Satoshi Nakamoto, and he himself had admitted to creating bitcoin!

Back home in Bulgaria we'd have headlined it “Shock! Bommb!” in the finest tabloid spelling.

It turned out that a physicist named Dorian Satoshi Nakamoto, who had spent his whole life working at classified military facilities, was living quietly in the United States. They called him and asked whether he might be behind the same name in the bitcoin project, and he… confirmed it. Well, why not?

Afterward, both he and his family repeated many times that the namesake had nothing to do with the creator of bitcoin; it was just a combination of a coincidence of names and a misunderstanding in communication.

Well, if you insist on liking this version, let me help you with the words of Dorian's brother, Arthur Nakamoto, who called him “a brilliant physicist who is also very good at lying. He worked on many classified projects, and nobody knows what he did during that time. He would deny everything; he would never admit that he created bitcoin.”

Yes, and the secretive scientist would choose his own name as a pseudonym, so that no one would guess.

The Musk in the Iron Mask

To finish off this line, the more apocryphal versions often feature the CIA and the Japanese mafia, the Yakuza—either as Satoshi's creators or as his killers.

That more or less exhausts the serious part of our list of suspects. Let's add a few curious options, because in crime novels the culprits are often precisely those who stay juuust a little off to the side.

For example, modest, secretive people like… Elon Musk. Half seriously, half in jest, in recent years he has often been mentioned in the role of the mysterious man behind the pseudonym. Musk often talks about bitcoin, and controversially, he's a programmer himself with serious ventures to his name… He even once added the hashtag #bitcoin to his Twitter bio, and the virtual currency's price rose by a few percent.

I don't know if you've noticed, but he does love to show off. Enough about Musk.

Satoshis from the Classifieds

We round out the “and others” list with Adam Back, another of Satoshi's fellow travelers from the project's first months and the creator of Hashcash. He denies it.

Nick Szabo, creator of the now-forgotten cryptocurrency bit gold, also with serious contributions to the blockchain movement. He was the first to describe the idea of smart contracts, back in 1997. A linguistic analysis points to him unambiguously as the prime suspect. He denies it.

We also have a Bulgarian candidate. As a joke—though plenty of things so far sound like a joke, and you never know where luck is hiding. Satoshi Nakamoto has the same initials as… Svetlin Nakov, one of Bulgaria's best-known programmers and educators! For a short while there was a very funny website that, with a genuine sense of humor, revealed the “truth” in great detail. Unfortunately, I can't leave you a link to it.

But at our next interview, I promise, I'll finally press Nakov to confess!

All for One

This brings us to the popular idea that Satoshi isn't one person but a team. John McAfee, for instance, the creator of the popular antivirus software, was convinced he knew the truth: that exactly 11 people, banded together, stood behind the pseudonym. Still, let's keep in mind that in Silicon Valley McAfee had a reputation as something like the local Yolo Denev, the legendary teller of tall tales from Bulgarian folklore.

The fact is that there are far more serious analyses too. They conclude that either a true genius hides behind the pseudonym, or a group of people using it as a collective name.

But even though in our part of the world, as the saying goes, two people make a rebel band and three make a rebel band with a traitor, I don't believe such a conspiracy could succeed, especially when communicating online.

And still, who is Satoshi?

Satoshi, Good and Bad

Most likely we'll never find out. Honestly, I'm not worried that the man will never collect his money; in my view he has done so one way or another—he's clearly smart and calculating enough. And he deserves it.

It's just that the fact that we don't know the real person behind bitcoin… somehow completes the whole idea of the blockchain movement very beautifully and precisely. And in my view, that fact is neither accidental nor a loophole left open through which the mystery might be solved.

Blockchain simply came as an answer to many of the flaws of the advanced online world. It solved problems that had long remained open. And all of them come together quite precisely in the pop art image that Satoshi Nakamoto has become. So that the next ones can follow, such as the creator of Ethereum, Vitalik Buterin.

The figure in the Budapest statue is rather unsightly as a work of art, yet beautiful as a symbol. It isn't even only about bitcoin, or about blockchain. One should never stop fighting. One should embrace causes that sound utopian, embrace them and carry them forward. Freedom never stops being a value, but only for those who desire it. Thank you, Satoshi! I hope you're enjoying life somewhere and truly preparing the next big ideas. The world needs to be shaken more and more by ideas, and less and less by conflicts…

He is criminally young, skinny and absorbed in his own thoughts. He looks nothing like the most eligible lads at the disco, and yet he is a billionaire. More important, Vitalik Buterin made a promising technological revolution possible.

Blockchain is a field with a future, and it is far from exhausted by the bitcoins that have been ringing in our ears. Well, the young man you see here made it possible for smart contracts, through blockchain, to give us a real chance to change many areas of our lives in the years ahead. He created Ethereum, the network of ether—the second most popular and far more stable cryptocurrency after bitcoin.

He also turned down $6.5 billion in cryptocurrency, simply because he did not like what exactly it was doing.

Not Everything Is Bitcoin, My Friend

Ethereum is not just a cryptocurrency; these days it is the largest blockchain platform. It was also the first mass-market solution that made it possible for the blockchain to hold not merely records of transactions but entire little programs known as “smart contracts.” Once they enter the network's database, they stay there forever and can be verified, traced and guaranteed. (For more on the main possibilities blockchain offers, read here.)

Ethereum created a whole new ecosystem that showed what blockchain as a concept is truly capable of.

“Even before our project, anyone could create their own blockchain,” Buterin explains. “But for every new application developers dreamed up, the original protocol had to be changed. Imagine if, say, the makers of a mobile app had to launch an entire new operating system from scratch every time they decided to build a new product.”

Small, but Already in the Know…

In other words, thanks to Buterin's project, the possibilities of blockchain are more accessible than ever before and are limited only by programmers' imagination. This platform also made possible the birth of NFT technology, with all its big prospects and its dubious sides.

The first version of Ethereum started working in 2013, when our hero and the chief creator of the new blockchain was 19. In May 2021, at the venerable age of 27, Buterin was officially declared a billionaire by Forbes—the youngest on the list—with a fortune of $1.4 billion. Well, he then briefly dropped off it, because yet another shift in the indices cut his wealth by 40% to “only” $850 million.

Still, with $1.4 billion or with “only” $850 million, Vitalik remains an eligible bachelor.

A Vital Kid

His real name is Vitaly, but everyone knows him by the affectionate diminutive, which is rather odd—it's as if your name were Petar and you became famous around the world as “Pesho.” As the name suggests, he is Russian, but he grew up in Canada, where he arrived at just 6.

He was born on January 31, 1994, in Kolomna, near Moscow.

What does blockchain bring together today? Economics and technology. That is exactly what Buterin's parents were studying when he was born. His mother, Natalia, was training as an economic analyst, and his father, Dmitry, graduated in computer science and went to work for an American computer company with an office in Moscow. In time he decided to put his profession to use and move the family to Canada.

Dmitry decided to show his son the world of technology when the boy was barely 4. He gave him a computer, which naturally became his favorite pastime. But not, as with most children, for games, films and chatting—rather, for learning how computers work and burrowing into all kinds of programs. They say that as a kid he was the greatest master of the subtle, lesser-known features of Excel.

By 7 he was doing so well that he created his own virtual fairy-tale world inhabited by bunnies. By 10 he had a pretty good command of the tough programming language C++ and was working on amateur but quite polished computer games.

Work, Son, So You Don't Have to Study

Over the following years Buterin became deeply interested in mathematics, programming and economics, and his parents had enough money to give him a good education. He ended up at a modern high school with an alternative way of organizing things, which, according to Vitalik, taught him to think and to strive to grow.

Then he got into one of Canada's most prestigious universities to study computer science.

Having decided early on that blockchain had the power to change the world, at 17 Buterin was already co-founder and editor of Bitcoin Magazine. In fact, he took on the venture with the idea of earning some money to buy bitcoins with.

It got so interesting that there was no time left for studying. He dropped out of university and, thanks to that… got support. You have hardly heard of the Thiel Fellowship, and you have hardly imagined that something like it could exist, even in our strange technological times. The charity is funded by PayPal's co-founder Peter Thiel to give financial support to young people who leave university to pursue their own projects.

Yes, it's a pity there is nothing like it for students here in Bulgaria. Quite a few people would focus on their own projects, and the universities need support anyway.

Lemonade and Ether

That is how Ethereum was born, whose cryptocurrency, ether, is the second most valuable, with a market capitalization of over $400 billion.

The platform Buterin created allows for countless applications, whereas bitcoin, by design and execution, has a single purpose: to serve as a payment system.

Vitalik spent the next six months traveling the world, researching and discussing various projects with their creators, all working in the blockchain field. The idea of smart contracts came to him in Tel Aviv, where he met the author of a similar platform, albeit one with a specific purpose. Buterin realized that a universal protocol could be created to do that job in any situation.

Before long he published a white paper—the core document on which the technical implementation of the Ethereum blockchain would later be based. In it he described the concept of “smart contracts” and pinned down many of the technical parameters.

He discussed the project with leading specialists, their impressions were good, and that gave him the optimism to carry on. The project proper began with a crowdfunding campaign. In just two weeks it raised $18 million, enough for the first steps. A serious team of specialists joined the development.

The crypto platform made a splash in 2015, quickly won fans and rose to second place in popularity in the blockchain world.

Money to Burn

May 2021 was quite an interesting month for the young man. Besides appearing for the first time on the most authoritative billionaires list there is, he threw another… $6.5 billion in the trash.

Yes, the world of blockchain technology is rather amusing. Sometimes it looks like the Wild West during the Gold Rush, and at other moments it is more surreal than Salvador Dalí wandering into Fakulteta, Sofia's sprawling Roma quarter.

The developers of the cryptocurrency Shiba Inu decided to give Buterin, as thanks for his contribution to the technology as a whole, 505 trillion coins, whose market capitalization was the sum above—about 10 percent of Bulgaria's GDP.

He thanked them officially for the gift, but… then forwarded it to a nonexistent address. The money simply vanished into thin air.

Officially, Buterin says the reason was his concern for security and the wish to avoid speculation in subsequent transactions. Others say it was simply a PR stunt to attract attention.

In the Crypt

Speaking of attention, though, the young crypto prince's relationship with it is rather contradictory.

He is known to donate serious sums to scientific research in the fight against various grave diseases. And also to research into drastically extending human life—a subject that genuinely excites him.

Very little is known about his private life; no one has heard of or seen him with a girlfriend. Buterin loves to talk to the media for hours about blockchain, smart contracts and other technologies, but steer him toward personal matters and the conversation ends quickly. He is absent from Instagram, on Twitter he doesn't even have a photo and writes only about tech. His personal website has no photo either, but he does publish quite a few reflections there, including on philosophy.

Partly because of this lack of information, he is a favorite target of lurid tabloid news—from stories that he suffers from a fatal illness to claims that he is autistic and that this is why he is peculiar in his dealings with the media. In 2017 someone even spread a rumor that he had died, which sent the price of ether crashing for a few hours.

Dr. Robot

Some journalists say his intonation is reminiscent of the virtual assistants Siri and Alexa. It's a fact that he is no king of oratory: his gaze darts off somewhere, and he speaks quickly and a little unintelligibly. Perhaps that is also why, for now at least, he isn't as popular in the West as many of his “colleagues.”

Apparently it isn't like that everywhere, though. “When Buterin talks about blockchain, Stanford professors pull out their notebooks and start taking notes,” says the well-known Russian politician and banker Herman Gref.

In the end, the young man has his important subjects and priorities, he clearly loves them, and he isn't all that close to life's usual vanities. You can tell by his clothes too—they are the last thing on his mind; he shows up casually, in a T-shirt, even at the world's most prestigious forums. He often wears mismatched socks.

Having left Russia as a small child, Buterin went back briefly only 15 years later, in 2016, and a year after that, at an international scientific forum, he met Vladimir Putin.

He loves to travel and often changes where he lives. Lately you are most likely to run into him if your path takes you to Singapore.

Before Us Gleam Fields of Blockchain

“The revolution the internet made can be repeated. Human relationships can be turned upside down by removing the middleman not just from money transfers, as bitcoin allowed, but from every other sphere of life,” runs, in short, the creed of today's hero.

“Security, reliability and transparency”—these are the three core qualities that sooner or later will allow blockchain to bring about its revolution, Buterin says. (More on the subject—read here.)

The young man talks for hours about the possibilities that Ethereum and blockchain in general offer. But, as he himself says, the most interesting ones will turn out to be precisely the applications we haven't thought of yet.

After the years in which Ethereum was created, the enthusiasm around blockchain cooled somewhat. Then came the period that specialists have dubbed the “crypto winter.” By all signs, though, it is drawing to a close, and the tech community is ready to give blockchain a new, more mature and more thoughtful chance.

I don't know, but listening to this kid's interviews, it definitely seems to me that there is both logic and conviction in his words. It's worth watching what he does from here on, because, by all appearances, the most interesting part of the blockchain world is yet to come. And one of the names we will hear often in that connection is Vitalik Buterin.

In March, a single file was sold by Christie’s for $69,346,250. Not just any file, mind you: a collage of 5,000 images. The sale made Mike Winkelmann, a relatively unknown 40-year-old graphic designer from South Carolina who goes by Beeple, one of the three most highly valued living artists. The anonymous buyer received in their inbox… a 319-megabyte file and their NFT, a string of characters that serves as a guarantee of ownership.

Then, at the beginning of June, the digital work CryptoPunk fetched a rather more… ahem, modest $11.8 million, paid at auction at Sotheby’s. It is a collection of 10,000 digital images created by the artists behind the Larva Labs project.

Jack Dorsey, the creator of Twitter, sold… his first tweet for $2.9 million.

Fine, these are serious sums, and we all know that sometimes people simply don’t know what to do with their money. But the more interesting question here is… how exactly can you buy a file or a tweet? Aren’t these things that can be shared just like that, for free? It isn’t particularly hard for everyone to own the very same digital image, to copy it and send it around as much as they like (copyright, of course, is a separate matter).

So what exactly is all this money being paid for? The answer lies in an abbreviation you’ll be running into more and more often in your news feed: NFT.

Tick-Tock-Token

The abbreviation stands for non-fungible token: a token, or a chip, if you’d rather avoid jargon. Either way, it is the embodiment of something we are given so that we can prove, in the simplest possible way, that we hold the rights to a given asset. And they are “non-fungible” because that is their defining feature. You can always exchange a 10-leva note (about $6) for two 5s. You can buy a bitcoin and then sell it. But these tokens have no equivalent; they represent something unique that cannot be swapped for something else in the same category. Simply because nothing else falls into the same category.

If that isn’t entirely clear yet, don’t worry: plenty of examples are coming.

The fact that we are dealing with something that has no counterpart quite logically pointed their first application toward art. Further down the road, though, all sorts of things are coming: even real estate and… nonexistent sculptures.

Although the technology has been around for more than five years, non-fungible tokens have become a hot topic only in recent months. It’s no accident that we began with the examples from Sotheby’s and Christie’s: even the biggest names in the business now trust it and use it actively.

Lately, NFTs have become an obligatory entry on every list of the best places to invest money in the volatile global economy that followed the arrival of the coronavirus.

Blockchain Under Pressure?

Not long ago we told you about blockchain technology, how it works and how colorful its possible future applications are. Well, NFTs are precisely one of them. The whole idea of blockchain is that once information is placed in the mass of the network, it stays there forever, for as long as that blockchain exists. It is unchanged and unchangeable, which is a kind of guarantee, the most valuable feature of systems of this type. Of course, there are quite a few technical details hidden beneath this, and you can read more about them, once again, in our earlier article.

When you buy an NFT, you are essentially buying ownership of a token, which can then be transferred to your digital wallet. In practice, it is exactly the same as buying bitcoin or ether.

With one difference: non-fungible tokens add uniqueness to the mix. You are not simply buying some part of the records in the network, but a very specific part, directly associated with your purchase. Whether it’s a physically existing painting, a digital file or a tweet.

An NFT for a Chicken

Does this sound to you like buying a plot of land on the Moon, or like one of the four hundred “relatively honest ways of separating people from their money” in the arsenal of Ostap Bender, the smooth-talking con man from Ilf and Petrov’s The Twelve Chairs? Well, you’re unlikely to convince Sotheby’s of that, or the enthusiast who paid 69 million for a collage of images.

Several bands are already selling their performances exclusively through NFTs. True, they aren’t especially famous, and this is more a form of advertising than a mass phenomenon. But even if we’re not talking about the sums I used to grab your attention, it is a fairly reliable way of protecting their copyright, because, at the risk of repeating myself, once information lands in the blockchain, it stays there forever. Nobody can claim authorship of a song without “showing” an older record.

In that sense, we can also think of an NFT as a certificate of ownership of something unique, one that offers complete guarantees and cannot be forged. The certificate is the tokenized asset, its representation in the form of an NFT.

Now You See It, Now You Don’t

This leads to some rather strange possibilities. For instance, the object itself could be destroyed while its NFT lives on, carrying the object’s entire value. Whether that makes sense or sounds more like speculation, I’ll leave for you to decide.

The next example is interesting not for its price but for something else. For a mere 15,000 euros, the Milan auction house Art-Rite sold… an invisible (and nonexistent) sculpture by the Italian artist Salvatore Garau. The work is called I Am, and its main selling point is said to be that it doesn’t pollute the environment. I liked the apt comparison with The Emperor’s New Clothes.

In this particular case, the sale wasn’t done through an NFT but in the classic way, yet… quite a few experts predict that deals like this will become more frequent precisely thanks to the technology.

NFTs for Swapping

Elon Musk’s wife, the singer Grimes, has already sold some of her digital paintings as NFTs for more than $6 million.

The American basketball league, the NBA, has also invested serious money in a project that sells NFTs for video footage from certain games. This way you may not have the right to broadcast the content, yet you can be its owner. And you can resell that ownership: something like a new version of the old trading cards of athletes that fans used to buy, sell and swap.

In a peculiar way, just as cryptocurrencies have thrown down the gauntlet to traditional currencies, non-fungible tokens are doing the same to collecting. Because they offer the advantage of uniqueness in the way we can best imagine it with, say, art collectors. You can buy as many reproductions of the Mona Lisa as you like, photograph it, keep a print of it at home, but there is still only one owner of the painting itself, in this case the Louvre.

But with one addition. The prospect that one day they will also make it possible to buy real estate. And anything else the market figures out has an element of uniqueness.

Money Goes to Money

Have the tech geniuses invented something brilliantly new? Are old ideas being reheated with new technologies? Or has the world gone completely mad? My personal answer, for now, leans toward the last one.

Is this a fad that will soon pass? Or the financial system of the future, one that will give artists a new way to make a living and earn more serious income? We’re yet to find out. Either way, the idea is quite unconventional and requires a serious shift in thinking before it can go mainstream. Then again, if you don’t believe in the future of blockchain, go and look at how the price of bitcoin and its siblings keeps climbing and climbing.

Clearly, the global economy needs new forms of exchange that match the new technological level. And perhaps the strength of non-fungible tokens lies in uniqueness. In owning something no one else could ever have.

And since things in this field are far from well regulated, there will certainly be room for enormous scams. It matters who chooses which blockchain for the transaction, and the usual rules for any deal apply too: it has to be clear that the seller really can lay claim to ownership or authorship.

According to The New York Times, the NFT market reached a record $250 million in 2020. In just the first three months of 2021 it has already hit 200 million. It is expected to grow very, very fast… or else to collapse as nonsense. But of course, the road to the digital future is paved with crumbled predictions. So all we can do is sit back and watch… at least until we decide to set aside a few million dollars to buy some especially impressive, colorful GIF of a kitty…

These days, who isn't talking about bitcoin? Its price has turned it into a hit. It keeps swelling and drawing attention. By all signs, the few quiet years on the subject, known in professional circles as the “crypto winter,” are now behind us. There is more and more talk about NFTs too: a system for selling virtual, and also perfectly real, art and who knows what else (more on NFTs coming soon). And yet behind all of this stands blockchain. This technology holds enormous promise in so many other fields beyond the world of payments. But how does it work?

Kryptonite

That was the name of Superman's Achilles' heel. And cryptocurrencies may have found the weak spot of today's global banking system. Thirteen years have passed since the mythical Satoshi Nakamoto created bitcoin. Before that there had been quite a few attempts at something similar, but they always ended in failure. Things started timidly. In 2010 one user took a key step: he managed to buy two pizzas for 10,000 bitcoins. A bargain, you'd think, a snack for some imaginary money… but not from today's point of view, when the price of a single one of those units has passed 60,000 leva (about $37,000). We'll leave the math for the pizza delivery guy to you.

So: how can virtual money exist? In fact, it's the good old “Money, commodity, money prime,” the formula Marx left us for the ever-growing value of those precious slips of paper, only in electronic form.

Enough people gathered in one network that can carry out transfers of value, with the key factor: a guarantee. The bitcoin network is 1,000 times more powerful than the entire ranking of the planet's top 500 supercomputers combined. And there is no longer any way to stop it. Over this decade it has become clear that the principle behind bitcoin, the so-called blockchain, works.

The Bitcoin Ledger

We need to go digital for a moment. We turn to the right person, Svetlin Nakov, the founder of SoftUni, a private software academy. Three years ago SoftUni was also one of the first academies to offer training for blockchain programmers. “It is a technology that lets us record data on many computers around the world, which can't be changed afterward,” Nakov explains. “Imagine a ledger, but not on paper, an electronic one. And it isn't stored on a particular server, at some small company or at Google, but duplicated, repeated on thousands of computers around the world.

Thanks to this, once data is written, it can never be changed again. No single participant in the system, nor any group, can change it.”

An easy example of this kind of network is torrents, which often cause headaches over copyright infringement. But they can't be stopped, because the files are exchanged directly between users linked in a network. Still, they have trackers, the places where people connect, and these add an element of centralization. With blockchain, that is no longer needed.

As the name itself suggests, blockchain is a sequence of data that keeps growing at the end, while each of its elements, the little blocks of code, holds information about its predecessors.

Give and DAO

And here we reach the most important part: what this mechanism can do for us, and why we talk so enthusiastically about its possibilities. Behind the otherwise well-known little word “dao” lies not only the Eastern principle of the way, but something else, this time tied to the future. It is also the abbreviation of “decentralized autonomous organization,” the type of system that blockchain makes possible. When you hear “organization,” don't picture a big office full of employees. It is computer code, but it can act in a similar way: it guarantees that the program cannot be manipulated. So the first DAO actually working in practice is bitcoin itself. Its only goal is to keep existing, and in return it offers people the ability to transfer money.

“This is starting to become a very powerful technological foundation, because it has applications in many fields,” Nakov says. “In the media, for instance. You add a news story to the blockchain and it can't be deleted or changed because someone paid or someone didn't like it. The distributed ledger makes it possible to decentralize whole sectors of the economy. For the first time we have the chance to build an unstoppable organization. An organization that is software, and software that doesn't run on one computer, so that when that computer disappears, it disappears too. What will you do to stop it?”

For several years now, with varying success, a content network of this kind, similar to a media outlet, has been running. It's called SteemIt. Its concept is very interesting and we will certainly talk about it in more detail soon.

Bakunin's Dream

So what, has technology come to revive the messages of anarchism? Not exactly, and yet the key word really is decentralization. Today's online world seems ironclad and indestructible to us, but in order to log into Facebook and Google every day, we send and receive data from the central servers of the two companies. What would happen if at some point they decided to make them expensive, or simply shut them down, in a world of corporations far more powerful than any state?

If today we use social networks owned by a particular company, search online with the help of a multibillion-dollar company too, and have no way of not depending on them, then blockchain makes possible a network that belongs to no one. One in which participants are equals and set the rules themselves. Governance is democratic and distributed among all users.

Just as the internet managed to spark the information revolution we live in, the future of many specialized blockchain networks will bring us decentralization, along with all the benefits and responsibilities that come with it.

More pilot projects are gradually appearing that demonstrate its applications.

All kinds of data, processes, information processing, even the management of organizations can end up in the “shared ledger.” “And this is a conceptual change. It's not just the new phone or the new currency, it's a technology that transforms entire industries,” Nakov says. Waiting in line are the social networks of the future, which can be democratic again, video-sharing networks, even hotel booking networks: calculations show that if they ran on the same principle, prices would fall by 15 to 20 percent.

Mining, Man

It makes sense for everything to start with means of payment, but even here bitcoin and the many cryptocurrencies that swarmed after it are not the limit of what's possible.

“The moment every phone has a crypto wallet and can send payments, you realize how many businesses will change, what opportunities will open up? Right now we pay with bank transfers, with text messages, and that's technology from the last century, it's absurd! It was the same with phones, and now calls are practically free. The same will happen now with money and micropayments. The banking system, IBAN transfers, sending money and having it arrive three days later, credit and debit cards and the monopoly of Visa and Mastercard: all of this is about to disappear,” Nakov adds. Which doesn't at all mean that we will suddenly all start paying in bitcoin, or that paper money will stop being printed. “For now, the only thing keeping many businesses from entering that space is the constant fluctuation of cryptocurrency prices.”

Not Worth a Bent Coin

Another future, but already entirely possible, application: thanks to blockchain, systems can be developed that guarantee the quality and origin of everything we buy. One pilot program is an internal blockchain network at a large hypermarket chain, which is testing it with eggs. The cartons have unique numbers entered into the blockchain, so at any moment you can check the journey of every egg from the moment it was registered, see its expiry date, every step of its history. Soon, when blockchain makes its way here too, we'll be able to stand in a store choosing a piece of clothing, a perfume or a car part, scan the code, and have the network return all the information about its origin. Information that can't be swapped or faked, precisely because it is duplicated with all participants.

And here again we are talking about a different paradigm. Even now it's no problem to create, say, a website for tracking goods, but it would belong to someone, someone would control it, and that completely changes the level of trust. It stands to reason that trust in some centralized company is lower to begin with than in a public system that no one runs.

Today brands play the role of guarantee: people buy expensive jeans because a famous name stands behind them. When origin can be traced from the first step to the last, it will make quality easier to reach and change the rules of the market. The other guarantee today is institutions. They are the points of trust. When you think about it, with a notary's work or a bank's, what you pay for is precisely trust. And trust is the defining built-in feature of blockchain networks.

A Bit Is a Bit, a Coin Is a Coin

After bitcoin's success there is more and more talk about Ethereum, programmers' favorite network, which is also growing steadily. It's important to note that it isn't exactly a cryptocurrency but a platform for creating and storing various blockchain applications, among which, of course, there are currencies too. It is the first platform that allows the execution of so-called smart contracts.

Of course, carried away by enthusiasm, we mustn't overlook the risks the new paradigm brings, or the important questions. “There is the other side too: the bubble,” Svetlin Nakov admits. “Give us money, we'll build blockchain solutions. Something similar happened when cloud solutions, machine learning, the ‘internet of things’ appeared.” Maybe that's why we ended up with the “crypto winter” mentioned earlier, which dampened the enthusiasm quite a bit. And yet in recent months it has returned in full force, especially in the context of the economic changes that came with COVID and the promising investment that cryptocurrencies and blockchain suddenly turned out to be once again.

The Call of the Digital

What about the well-known danger of hackers? The salvation, again, is built into the principle itself. The blocks are linked cryptographically. The successes of bitcoin and other cryptocurrencies clearly show that the system is secure enough. To crack the code behind your crypto wallet, the most powerful computers would have to try the countless possible combinations for billions of years.

Of course, in cryptography things are always evolving. Within a decade, quantum computers are expected to become a reality, capable of volumes of computation unthinkable today. The code behind bitcoin would be no problem for them, but new cryptographic solutions have already been developed that would hold up even then.

New variants are gradually appearing too. Under the proof of stake principle, used by many of the newer descendants of the bitcoin network, each participant buys a share of the network and in return receives a proportional share of the resources from its operation. Soon there will also be more private networks running on the blockchain principle: where outside users don't need access, simply as a system for, say, quality control or transport.

Turnkey

Today, if someone loses the key to their crypto wallet, it's almost impossible to regain access. That is also because of the very principle of blockchain: everything there is transparent, but anonymous.

Another natural worry: in a system not regulated by legislation, states and supervisory bodies, how will the creation of a monopoly be prevented?

But decisions in a network are usually made by all its participants, who vote on a democratic principle. The smaller ones band together against the bigger ones. And if a large group of participants disagrees with a given decision, a parallel network is created, a so-called fork. The two exist side by side and quite often merge again later, once it's clear which decision was the right one.

So the aim of modern blockchain networks is to have a large number of small participants. If someone holds 80 percent, they can run it, and we're back to the familiar model. But there's little logic in that happening. Bigger participants have nothing to gain, because that way they directly kill the network's value. Sensing a monopoly, the others will rush to leave it. What would happen if someone today bought half of the world's bitcoin “mining” capacity? The price would collapse at lightning speed. The fact that the big players have no incentive to control the network is the essential difference from previous models. The system encourages participants to build valid blocks on top of other valid blocks, that is, not to try to cheat or reward mistakes already made. The “miners” don't work for a person or an organization. They get their income from the blockchain itself.

Hidden in the Script

The network has many participants, let's call them nodes, which hold copies of the entire chain. And when a new block is added (in bitcoin, for example, this happens once every 10 minutes), it is sent to all participants, who check whether it is valid: whether it follows the rules of the network, which are public and well known to everyone. If it does, the block is accepted and its data can no longer be deleted.

Of course, many more important questions are waiting for answers. Take, for example, the network we mentioned that could decentralize taxi services: quite a few things still need to be worked out there. The absence of middlemen and the democratic nature of the venture are undoubtedly gains, but also challenges, and a responsibility. With no intermediaries and no hierarchy, who will keep the participants in check? Do they meet the requirements, will they deliver the promised service? There are many options. What matters is that they are thought through and built into the consensus. One of them is ratings: at first participants work at a lower price until they earn trust. Another approach: introduce clear criteria for joining. Besides, despite the platform there can still be intermediaries who add an extra service: insurance, for example, a guarantee that you'll get your money back if you're not satisfied.

And here's something even more unconventional. Democracy… based on blockchain?

The Dao of World Revolution

The idea is quite a few steps ahead of everything we've told you about, but it is certainly provocative enough to make us think. What if elections became not a right or a duty, but a source of investment, even of betting? The notion of DAO democracy belongs to economics professor Robin Hanson and Ethereum's creator Vitalik Buterin.

The prediction market is used in gambling, but it is also an important principle on stock exchanges, and something we encounter every day in our lives. Programmer Vladislav Zorov, who has serious experience in the field, gives the following examples. Statistical studies prove that sports betting odds predict the outcome of a given competition more accurately than the opinion of leading experts. Bets on who will become president of the United States are more precise than polls. Bettors ask around, take an interest, add their own experience and point of view. Another striking example of the “wisdom of crowds”: a jar filled with a huge number of candies is shown to 100 people, who are asked to guess how many there are. Then the results are averaged: 4,515. Amazing! There are 4,510 candies, and the estimate is closer than that of any single participant. The majority, however, tends to underestimate certain risks, so it's important to somehow add the experts' opinion as well.

Vote Buying Is… Encouraged

The principle is this: a prediction market opens, say on who will win the next match between Levski and CSKA, Sofia's two great football rivals. Bonds are issued at 1 lev (about 60 cents), sold to each participant, and after the match 2 leva are paid out only to those who guessed right. Very soon the price of the bond will show what the two teams' real chances are.

In recent years, similar experimental polls have been run on questions such as whether the next SpaceX rocket launch will succeed, or how Ethereum prices will change. And the results unerringly predict the actual outcome. DAO democracy combines blockchain and decentralization, and uses prediction markets to gather citizens' opinions. The principle is the same: a question is posed, for example “Under which party's victory can incomes rise by 20 percent by the end of its term?” and, again, the correct bets are paid out afterward. “Then buying votes becomes a civic duty. People don't vote on sympathies; the sensible approach is rewarded. Even if a candidate looks good to you, you won't vote for them, but for the one you think will get the job done. But the questions have to be chosen very carefully,” Zorov says.

Let's end with what is most characteristic of every blockchain network. Every block keeps every memory of its past; only the future changes. A wonderful principle: it is precisely the future, and its more advanced society, that this technology promises us. Whether it will succeed, and whether it will stay only in the realm of finance… only time will tell.

Published: Spisanie 8 (8 Magazine), issue 4/2018

Last updated: June 4, 2021

We're living in the age of Web 3.0, they say… But isn't there just one web, one internet? In fact, the global network has already gone through two massive transformations that we never stopped to think about while we were caught in their whirlpools.

The technologies of the day keep changing, and so does the relationship each of us has with the network, and with technology in general. We don't have a single second to sit down and make sense of what's happening, let alone dig deeper and analyze it.

And yet the web has gone through different versions. Let's try to look at its individual stages together with the researchers, in some attempt to guess what's coming…

No Sixes and Sevens

So, we start with a very quick introduction to the terminology. We've all heard of the versions of Windows—95, 98, 2000… before them 3.1, later 7… Today, thankfully, numbering in the software industry is a little more standardized, and that logical chaos is gone.

Every truly different, renewed version of a software product starts with a whole number—1.0. Then come the serious updates that change the functionality noticeably enough, and in those cases we go on to 1.1. If there's a slight improvement that few people will notice, 1.1.1 follows. The fourth digit is reserved for changes so small that users would hardly notice them—bugs fixed, minor inconsistencies smoothed out… In a word, the “fine file” has been run over it.

7/8

Some of the bigger companies choose to add something more recognizable to the numbering, but not everyone can really afford that. WordPress, for example—the platform that today powers a third of the websites on the internet!—names each new version after a famous jazz musician. And while that version is current, it makes an effort to promote the work of the chosen artist.

The Android operating system, for its part, names each new major version after… a dessert. I wonder what will happen when their imagination runs dry in this admittedly limited field.

Today's biggest online projects don't number their versions at all. The world moves so fast that changes to Facebook's design, for instance, happen constantly. What's more, some users get one variant while the rest get a completely different one…

And still: what happens if we try to fit versions onto the entire web, onto the vast and boundless internet?

Who's No. 1 Now?

This concept belongs to two people—the researcher Tim O'Reilly and the creator of the web himself, Tim Berners-Lee—and today it's considered a fairly widely accepted division of the separate eras online.

Let's go far, far back. A mere three decades have passed since the creation of the World Wide Web, and already everything is so different that it feels as if we're living in some kind of fairy-tale world…

Like any other software product, we assume there was a version zero—Web 0.0. It existed when the web was still just an idea and a subject of scientific research.

The period of Web 1.0, the first “major version” of the internet, is generally considered to run from its very construction, following the idea of Sir Tim Berners-Lee in 1989, until 1999.

Back then the internet was something exotic, accessible to a chosen few, and built on technology that looks rather primitive from today's point of view. Many of you (35+) remember all too well the screeching, singsong sound of the modem connecting to the network through the good old telephone wire. And how a whole hour online caused trouble with the sulky neighbor you shared a duplex phone line with… anyone who doesn't know what a duplex line is shouldn't bother wasting time finding out now.

It was the boom of the internet cafés, which had a far more stable connection. There, for example, you only had to wait about a minute for a slightly heavier picture to download from a website.

One, Two, Three…

Web 1.0 is also called Read-Only, the internet for reading only, before things became interactive. Information “flowed” in one direction only—from the source to the recipient, from the site's creator to the user. And yet it flowed at full force, and so the information age was born.

Then suddenly LAN technologies arrived, and networks became far more sophisticated, faster and ready for instant communication. Somehow fittingly, this happened right at the turn of the millennium. The JavaScript programming language appeared and allowed everything to become interactive—every page could turn into a separate application with increasingly serious internal logic. Websites were no longer just pictures and text you looked at and moved on from, but full-fledged apps of the kind we'd previously had only offline. Enriched with the ability to talk, even on video, with people on the other side of the planet.

And suddenly it became clear that the world had ended up in the web of the web. Only the world itself didn't realize it, because it was intoxicated by what it had seen. The initial speechlessness at being able to write an email that would land a second later anywhere on the planet moved on to its next phase. People could now communicate fully, surf fast and get much more, and much better, content from the network. The second version of the internet arrived, together with the giants of its time—social networks, Google, everything that defines our present day.

5 for 4

And so we found ourselves in the era of Web 2.0. Technology suddenly shifted to accessible content and… most importantly, the user as a generator of content ended up at the center.

Before that, we visited pages to read news, just as traditional media produced it. Web 2.0 brought the time of what Facebook defines best—one user logs in to see what another has generated in an interactive world.

The same researchers believe the three main driving forces behind the rise of Web 2.0 were mobile technology, social networks and the cloud. With “smart” phones, we suddenly found ourselves with an entire computer of utterly unreal capabilities in our pockets. Social networks, meanwhile, abruptly let us step out of anonymity and become valuable online, not hidden behind nicknames and avatars but as our real selves. Especially once it became clear that we were on an equal footing with celebrities—starting from the same Instagram profiles as anyone who decided to photograph their breakfast or their cute baby.

And, of course, the cloud. It allowed any smaller company or successful startup that had earned enough trust to quickly scale up its online resources. Cloud technology overcame the limits of hardware and brought flexibility, scalability and far greater availability of internet resources. Instead of buying expensive data centers that quickly became obsolete, companies got unlimited resources at prices unthinkable before.

But what comes after that?

6, 6, 6

Here we are, at the present day. You may not suspect it, but according to many leading specialists, we are right now on the threshold of a new watershed. Accelerated by the forced digitalization that came over the past year because of the coronavirus, a new transition is at hand.

In fact, it was Tim Berners-Lee again who spoke about it 15 years ago. He calls the third phase in the development of his brainchild “the semantic web.”

And here the speed of communication and the capabilities of the hardware itself are no longer nearly as important.

There are three main directions expected to form the foundation of Web 3.0—edge cloud solutions, decentralized networks and, of course, artificial intelligence.

Three Out of Three

Edge technologies (edge cloud computing) are linked to some of the most talked-about fields of recent years, such as managing artificial intelligence or the Internet of Things (IoT). With this approach, the traditional internet connection between server and user is gone, and data transfer takes place on three levels.

At the base of it all is the cloud; individual edge units, or edge nodes, connect to it, and the end clients in turn interact with those. This architectural solution is especially popular with “smart” devices, where it matters to shorten the link between the user and the source of information. That's where the intermediate layer of servers comes in, drastically shortening the path. So a self-driving car racing down the highway at 200 km/h doesn't need to store the entire map of the road it will travel. It's enough for the map to be kept at the intermediate level, with the car “downloading” the bits it needs.

There's no need to go into detail about artificial intelligence—we often tell Digital Stories about it, and at length.

Perhaps the least familiar of the three directions is decentralized networks, of which blockchain is an example. They are a great help to technologies that generate data (whether the readings concern your health, the condition of agricultural produce or that of your car). With decentralized networks, data is sent and received quickly and far more safely, without risking security.

Three Times Three

In Web 3.0, users and technologies interact directly, with no need for intermediaries. According to Tim Berners-Lee, the semantic web we are entering will be centered on the human being and their security online. But it will also let them interact with every technology that ends up online on a new, personalized level.

Still, those are the technological aspects. What should we, as users of Web 3.0, expect?

First of all—internet everywhere. Yes, in Bulgaria we're rather spoiled by the fact that a decent enough connection now reaches almost every village, but much of the world will very soon get access of an entirely new generation. We're talking about projects like Starlink. Through it, Elon Musk's company SpaceX will soon have a network of satellites providing a good connection to the web from any point on the planet.

Besides, Web 1.0 and Web 2.0 each came with their own new paradigms for how business is done and, accordingly, what users get. Both social networks and eBay, Airbnb and Uber became possible—all very different forms in which the end user receives a far more accessible and varied service. Of course, all of these also have downsides related to inequality, monopolies and poor regulation.

One to One

Web 3.0 is expected to change that too. Thanks to the much higher level of security in data exchange, it will be possible to exchange goods and services directly between individuals, businesses and machines, with no intermediary needed. The entire layer of businesses we just mentioned will become redundant, because until now they were the link between whoever offers a service and whoever receives it, and they were the ones guaranteeing trust in the system.

In other words—the end of middlemen and resellers of services, more decentralization… Especially if we believe this could be allowed by today's powers that be on the internet, which have turned into corporations far mightier than even the strongest states.

Berners-Lee also foresees a significant growth in the volume and scope of interactions between people and machines, to heights we can't even imagine today.

One in a Million

Of course, blockchain is another of the directions here, one with potential in far more areas than cryptocurrencies—we'll soon tell you about it in detail.

The “daddy” of the WWW also promises us a world of information that is far more complete, organized and reliable than today's social networks and search engines could ever give us. I'm not sure we have enough arguments to share his optimism on this, but I hope he's right.

And what else? Hardly anyone could tell you in detail. Just as no one could have predicted, say, what social networks look like today. But it's more than certain that Web 3.0 is arriving with plenty of new and promising ideas that will change our lives, that we'll be talking about, and that will give birth to the next Digital Stories.

What comes next? Should we expect Web 4.0 to bring the “symbiotic web,” in which we'll “merge” with computers on a much higher level? Then again, that still looks like a (perhaps) impossible future.

But isn't everything new just something old, well forgotten?