Mihai Alisie on the History of Crypto Valley

Transcript

My name is Mihai Alisie. I am the creator of Bitcoin Magazine, co-founder of Ethereum, and after Ethereum, the founder of Akasha, a toolkit enabling communities to build their own decentralized social platforms using technologies like Ethereum and others. Discovering Bitcoin I discovered Bitcoin for the first time in 2011, and it was quite a mind-blowing experience because in the beginning I was doubting how such a thing can exist and if it's for real, and that was when I was trying to piece together and form an informed opinion.

And that made me aware of the lack of a coherent source of information. Back then, it was a blog post here and there, or a post on the Bitcointalk forums. And of course, if it was something mainstream media, it was about how bad this thing is and all about the fear surrounding the markets and all the bad things you could do with it. And following this, one of the best, or some of the best blog posts that I read were written by Vitalik Buterin. And I reached out to him after seeing this need and proposed the idea, "what if we make something like Bitcoin Magazine, as a coherent source of information

from which also mainstream publications, like Forbes and others could get in touch and get good information." And it was quite funny, afterwards it happened, and we were seeing Forbes and other big mainstream media referring to Vitalik as Mr. Buterin, and we were like, "oh, look at this guy!" He was just this kid writing from his bedroom at home. And that was quite an enlightening journey and we were privileged to get this front seat, witnessing how everything unfolded.

It was still the early days and along the way, we also understood that Bitcoin, as great of an idea as it is, it had opened a path to so many other ideas to emerge from this, like Namecoin and so many other use cases using this distributed ledger as a foundation. And it also made us aware of the limitations. And it kind of made us wonder, "what's next? What will be the end game?", so to say. And after Vitalik was invited to Spain, where we spent some time, the way this was after two years already working

together online, we also met in real life. He made this road trip around Europe and he interacted with a number of other projects, including Ripple, Mastercoin and Colored Coins. And somewhere around November 2013, I remember how he sent me this email: "Hey, I've been working on something. And please let me know what you think about it." And he sent me the earliest draft or one of the earliest drafts of what was not yet named Ethereum.

It was like 'Ultimate Scripting Language'. So when I was reading and going through, it was the first time after Bitcoin, when I had this feeling, "this is huge, this is gonna be epic, it's gonna change everything." And it made me instantly want to be part and help in whatever way I can to make this cool idea a reality. Getting involved with Ethereum So fast forwarding from November 2013, when we started looking who is going to help us

make this project reality. Of course, we had the technical side of things, but we also had to take into consideration other aspects, like the legal uncertainty that was surrounding anything blockchain-related. In particular, also because of the mainstream perception and media that was portraying it in such a dark light. Finding Zug We were looking at a number of jurisdictions because many of the developers that were contributing to the earliest prototypes of Ethereum, the clients for Ethereum, were starting to wonder, "is it okay if I contribute to this or

am I in any way going to be liable or get in trouble for contributing to this?" Exactly not what you want people to be focused on. They just focus on doing cool things there, not worry about that, someone else will figure it out. So we were looking at a number of jurisdictions, including Canada, Singapore, Germany, UK, Netherlands and a few others. And Switzerland was one of them, and I was the one that volunteered, "okay, I'm gonna go to Switzerland and see what's there."

Starting Ethereum in Zug In less than a month, on February 24th, we were already signing the incorporation papers for Ethereum Switzerland GmbH. And Ethereum started with a GmbH because it had initially a lower incorporation fee, 20,000 francs is quite a lot for a startup, especially in the earliest phases. But we were always looking, "how can we keep this open source and nonprofit maybe in the future," which is why we reached the final form with the Ethereum Foundation, incorporated on July 14th.

Working with MME on setting up the Ethereum Foundation Working with MME was also quite a great experience with a steep learning curve for them. In the earliest encounters, we were trying to make them understand, "okay, are you familiar with Bitcoin?" I was like, "what?" That's not a great start. So then trying to connect the dots with peer-to-peer technology.

"So have you heard of BitTorrent?" It was like, "no." I was like, "okay." So then we went to the basics, and after a couple of meetings they said, "okay, we understand what's up with this Bitcoin, the decentralized ledger, and how everything works." Okay, so now Ethereum, again... But they were very quick to learn, and they've seen the potential, and even if in the earliest days, they saw that we don't have a lot of of money, and we're not the classic corporate clients, where you have sure money

revenue for months or years with contracts and all that stuff, but they understood because I said, "this is going to be something big, and if you will help us make this happen, for sure, MME is going to be a global force in this industry, and it will stand to gain a lot." And as far as I know, many other companies replicated the success, and what we've tried to do, what we accomplished now with the setup, and using this system with the foundation as the legal entity for the project that would develop open source technologies in the decentralized field.

And Samuel Bussmann was also, it was a duo, Luka Müller and Samuel Bussmann were both great, and they were the main people that we worked with, each specialists in their own areas, and it was quite nice to see them sometimes ping-ponging ideas and challenging each other, I was like, "what if?", and then the others are like, "oh nice!", and then they are like, "oh, okay." So it was quite a nice discovering journey, and it was legal hacking, in a way.

If we were mainly concerned with software hacking and building these cool things, they were also enthusiastic and quite passionate about the legal side of things, and how you can come up with these new fresh approaches to accommodate this innovative technology. So that was great, rather than trying to feed the technology into what was already existing, they were making the leap from the other side to meet the technology. Not downgrade it, but update it, so to say, on the legal side. So that was great, and I'm grateful to them, and wish them all the best also moving forward.

Searching for the soul of Ethereum So after we landed in Switzerland, we made the first steps towards this legal entity that gave peace of mind to the developers and the contributors to the project. Now they were no longer worried if they get in trouble for making contributions to this project. There was still this soul searching internally, even among the co-founders and other team members, where we had these two competing visions for what it even could become, and on one side we had this more we-centric for-profit vision, which we compressed as Crypto Google.

And on the other side, we had this more non-profit vision similar to Mozilla, Crypto Mozilla, this would be the two sides of the coin. "What should be Ethereum?" And ultimately, myself and Vitalik were among the people that really stood up from the beginning with the idea of open source non-profit all the way. And this happened between, let's say from the beginning of the year, kind of the beginning of 2014 until July 14th, when we had the Ethereum Foundation incorporated, and the vision was the open source non-profit.

And today, let's say, in many ways, Ethereum is that Crypto Mozilla. You have the non-profit, the open source technologies, and this safe zone similar to Linux, in a way where you have all of these companies for-profit and non-profit finding a credibly neutral platform on top of which they can build their projects. Without any fear of any weird incentives that we would have had as Ethereum as a for-profit company to replicate, or do better, their ideas on top of the Ethereum blockchain. So, I think that was a pivot and very important moment in the genesis of Ethereum and what it became today, the success we see today in terms of adoption,

and companies, and banks building stuff on top of it. Success was not guaranteed You know, in the early days, as I guess with any startups, the success was not a guarantee. It was just this crazy idea and a cool idea, that these young people had, and you still see this even today. If you try to explain what blockchain is and how it can work, without decentralized entities and so on, you might still get a reaction here and there like, "That cannot work, they will not let you do that."

And you know it works. It has benefits also for the centralized players, and ultimately, if you think about it, efficiency can make even established players make sacrifices in terms of control, as long as they get this increased efficiency, improved profitability, and other very clear advantages in their spreadsheet. So, I think we gradually are seeing that unfolding with many banks and I think Visa and Mastercard are also doing something and using stable coins at this settlement layer.

Or big sport clubs doing all kinds of NFTs, tickets, merchandise. So, I think we are still seeing the early signs of mainstream adoption, we are not there yet, but it's coming soon. So coming back to the 'Before all of this craziness'... In the early days it was like this effort driven by passion and the belief that what we are doing is worthwhile, and someday, somehow, it is gonna be all working and worth it. And some people had families and kids, and some expenses need to be covered.

And persisting through many months of being unpaid, and so on, is quite a challenge. And even if you are ideologically aligned and you think that this is going to be a great thing, that it's a once in-a-lifetime opportunity, you still have to think, "how do I put bread on the table, pay for the roof over my head," and all that stuff. Preparing the crowdsale It was always about, "let's get to the crowdsale, let's get to the crowdsale." and this was also part of the journey with MME and other firms, because we worked also internationally with some law firms trying to get an idea how is this going to be also

internationally speaking. And it's hard to get a solid answer, it's more like, "hey, will we get in jail for doing something like this?" "Probably not," or, "most likely not," but never some kind of answer like this, "no, no, just calm down, man, it's all good." Everyone would like solid answers like this, or, "will we get into trouble?" And, "okay, so when can we have this crowd sale?" "I think we still have some work to do, and some things to research, maybe like in about two weeks," and for some people that might be familiar with the "two weeks, two walks" meme,

it was always these two weeks, like the community was also asking people from the community eager to participate, "hey, when is that crowdfunding event?" And then it's like, "well, we talked about a lot, it's in about two weeks." Two weeks pass, so it's like, "hey, what about that crowd sale?" "So we talked a lot, it's in about two weeks." This is until the end of July. And getting to that point where we had, in parallel, also to take care of all these technical challenges and making sure that the bitcoins that we would raise will not be lost, you know, it's like the biggest face palm moment.

Like, "wow, the crowdfunding was a success, but we can't access the bitcoins." That would be such a stupid failure story. We've done a lot of research, and we had a number of consultants helping us, distribute multi-sigs, keys, protocols, you do this, and then you have someone signing things from there, and the geographical distribution. Anyway, it was quite a complex thing. And luckily we were not locked out of the funds, and we didn't have any hacks and all that, so good work.

But it was a moment where, so even if you are a believer in the success of the project you're working on... After months, and where you spend time with people that are also believing in the success of the thing just as you do, you might start wondering, "are we in a bubble? Will other people also think the same, like we do, this is like such a cool thing, and they will be excited about it?", and so on. So our feedback source was just mainly coming from a newsletter sign up form, which I came up with and was like, "hey guys, if we are doing this Miami conference, what if we have on Ethereum.org

an input field for people to just sign up, see if they're interested?" And there were hundreds, thousands of e-mails signing up to be updated. "Wow, there is interest." "But are they really mails or bots?" That was then the second question, after some time. And the other important big source of feedback was on Reddit, the subreddit for Ethereum, where we had lots of engagement back then, and Reddit was a different thing than it is today, for the community of Ethereum at least. The crowdsale It was a moment where sometimes, before the crowd sale, you ask: "are we crazy or is this gonna work?"

And after we had the first hours of the crowd sale and the first 24 hours where we already had the first millions. You know, "Wow, we are not crazy or we're not the only crazy ones." That was a confirmation, one of the biggest confirmations that we were onto something big. As the days went by, at the time, it was the most successful crowdfunding campaign ever in 42 days. We had enough funds to realize the wild vision that Vitalik set forth.

And that was something that was reassuring, and to some extent, that stage is maybe one of the most vulnerable when Ethereum could have just as easily ended as one of the cool ideas that never happened. Just lost somewhere in the footnotes of a Wikipedia page somewhere. But now it had the resources, at least that's no longer an excuse. Now it just had to find the right people also to build the vision forward. And about a year later, at the end of July 2015, we had the genesis of the Ethereum blockchain.

And that was the point where the cat was out of the bag. And Ethereum has this crazy idea of a permissionless blockchain, credibly neutral where anyone from everywhere can build their own application. Unstoppable applications, It was out there in the world. And yeah, it's still hard to believe at times, that it's been 10 years since this moment. And that slowly, but surely we are seeing some of the crazy things, or that were deemed crazy by others, are now becoming reality.

"You see, man? The banks, I told you! They're doing stuff with blockchain." Or the big sports clubs doing stuff. And I think we're still only in the beginning and the coolest things that we will see built with this technology have not yet been published. Still exciting times. Still early for anyone interested in doing stuff in this industry. Ethereum tree Ah, yeah, this is the Ethereum tree.

And those are the rocks, or the rock, where the payment was done. The first bitcoins, because we didn't have any ether back then, were paid to the people. And the first salaries were quite a big milestone for everyone that put up through all the months of uncertainty. So after the first weeks of the crowdfunding, we finally had the resources to pay salaries.

"Yay!" A big moment for those that have been waiting for quite some time. And under that tree there, where you also have the rocks, I also have a picture of it, we were able to pay the salaries for the first time from the bitcoins that we raised. And I remember it was like, the moment where it felt for the first time touching that it's real. Before that it was still just those numbers on some screen, somewhere in the UI. But now seeing that you have some Swiss francs in the bank account and now you can pay for a bottle of beer or whatever it was.

It made that thing feel more real for me, and I guess for everyone else. It's not just that crazy idea, it's that crazy reality now. In retrospect, did the stars perfectly align for Ethereum? Yeah, yeah, true. So especially when it comes to Ethereum's early days, the Genesis in the end of July 2015, was the point where in practice, not in theory, Ethereum left that most vulnerable phase, where just because internal fighting conflicts and in some cases egos of people. And people,

what's the hardest thing about technology? And it's like not the technology, sometimes it's the people. Getting people to get along and it's sometimes like a janitor's work, like, "come on, guys. Why are we doing this? It's going to be okay. Think about the bigger picture here." So after we got past that point and everything being open source and all this, I think for Ethereum it was its existence guaranteed to some extent because already out there, even if the buzz factor increased by a billion or billions, even if something happens to me,

Vitalik or the Ethereum foundation, the project is still out there, it can be maintained by other contributors and all of that. Or the projects themselves that are building on top of the platform. So from that aspect, I would say yes, that is something to be proud of. But still, when it comes to if there is something that I may be proud of? It would be that I'm proud to be part of the Ethereum community. And in some cases you see because of that crypto tribalism that I mentioned some communities might be less welcoming to certain people or projects.

But to some extent, I feel that Ethereum is quite a welcoming community, friendly and open to collaborations with other projects, and I like that, I like that a lot, and I'm proud to be part of that community, you know, so to say. And yeah, happy to have been putting my shoulder there, when making that happen or making it possible, so to say. Because ultimately, the people themselves that formed the community and so on have been attracted by the technology, but stayed for the people that were part of the community building on the technology.

So I think that's a key there in the bigger picture of the success of Ethereum as a project and as a community building a technology. Future of Crypto Valley Speaking in the future, I think it's not only about this, but also maybe about similarly how we've seen this evolution in the understanding of what cryptocurrencies and what blockchain is and what you can do with it, that Crypto Valley will not remain just as this name, brand and place where you can pay your taxes in crypto, which is still like the Level 1,

use cryptocurrency as units of value. But seeing how crypto technologies, and not just currency as a use case, would become gradually part of the interaction with the city itself. And there have been talks, and we've seen examples of smart cities and in some cases smart cities are about the internet of things, data. Think of real-time data from sensors like Raspberry Pi's, or Arduino's on the air quality, or the noise levels, or so many, you know, you can get data on many, many things.

But I would argue, based coming from again, like social networking and humans, fundamentally social beings and programmable money as a fundamentally social thing, that we can go beyond smart cities into smarter citizens, living in a smart city. And for me, that means tapping into this collective intelligence that you have naturally occurring in groups of all sizes. And in some cases, you see this in action. For example, in neighborhoods that instead of waiting for some centralized entity somewhere to take action to solve that park where the kids can play.

They crowdfund the resources and build that, renovate the park for their kids in their area. So this goes also to a nice quote from Carl Sagan, where you have that pale blue dot, epic scene where you go farther and farther away from Earth. And it's about how sad in a way it is about people fighting over this one piece, one pixel on the pale blue dot. When in the bigger picture, we are all living on this small dot in the universe. And distributing this responsibility in terms of empowering neighborhoods and groups of all sizes to take actions in their neighborhoods to improve that one pixel, is I think maybe one way in which

we can reach this massive shift into lasting change on the biggest challenges that we face as a civilization instead of waiting for one government, one president, one mayor to come up with the solution for everyone. Being a city, a state or a world. And for me, I think Crypto Valley can be one of the pioneers into trying out these technologies, and it's already kind of set up for success because it's not Switzerland as the one country to decide for everyone.

You already have these cantons and everyone taking care of their own things in some way. So the next thing would be the decentralization to the next level where, if you think about it, it's going to be bringing a lot more value to the cantons and the overall federation because it will free up all the resources that are usually needed to analyze and do this. And it would maybe make it easier to support through various grants and initiatives, various objectives that it wants to see solved within communities, cities or cantons.

And you know, other things like voting and you have like this direct democracy which is super cool again thinking in terms of democracy in general, and how the legislature for democracy is not always the best choice because politicians tend to promise the moon and the sky and after they're there for four years, they pretend, "who said that?" But in here, you have a bit more power as citizens and I think that would also be something that goes really well with the mindset of decentralization of power and empowerment of the citizens as individuals, part of a community.

To move from just ideas and discussions into action through mobilization of resources and people that want to see that happen in their neighborhood or city. So I would say, you know, Crypto Valley in the bigger picture, and maybe who knows even Crypto Nation as a name, could be something super interesting to see evolving, moving forward as it is the home already of all these projects, of all these brilliant people with all their cool projects. And in terms of efficiency, again, and all of this, I'll say, a rapidity to response, a resilience of all these systems. It's the next thing that we

can hope for in terms of resilience, openness, transparency, and empowerment for individuals as part of a direct democracy in the most decentralized country on earth, or one of the most decentralized countries on earth. Permissionless blockchains as an endangered species I think permissionless blockchains in general are quite, if we would make a metaphor, like an endangered species, and we should be caring for them and nurturing them.

And this is the part where I would say that no one really has it all figured out. It's all still a big experiment for everyone, every company, every project. It's maybe one of the biggest experiments that we had since the internet, and believing otherwise is a dangerous path, because there are still many unknowns, many things to be figured out from scalability to privacy and so many other things. Call to end crypto tribalism All the projects and other projects that are building in this space should be more friendly and forward looking

towards collaborating with one another, because in the end, decentralized technologies and platforms, even if we are witnessing this crypto tribalism because the cryptocurrencies, which kind of put people in this mindset, "oh no, is that a competitor to the value I have?" And it's maybe natural in some way to see this effect, but I think we can move past that and understand that in the bigger picture, if this type of technology becomes the backbone of the worldwide e-commerce and finance, universal finance, so to say. What we're seeing now are just peanuts, in terms of the value.

And there is enough value out there to be extraordinary, or like fantastic in terms of revenue and investment opportunities for everyone, but that's not the main point here. I still think that the bigger picture would be to understand that in this decentralized technology space and blockchain, cryptocurrency in general, we are more like, maybe family is not the right word here, because you kind of have this, "who's the father, who's the mother?" But more like a union of some sort.

And what does this union stand against or why does it exist? It's to challenge the centralized financial structures which have been persistent for decades and centuries in some cases, proposing that alternative to people. And in the end, because this is still an experiment, having more than one alternative is the right thing to have, because otherwise, even if your project is decentralized, but there is only one alternative, where is the decentralization in that?

If you take it to that point. So I think it's similar to how you have this effect with Bitcoin, and like when you see like the price of bitcoin rising up, you see kind of like also the water rising for all the other boats, so to say, since we're at the lake. I think it's going to be similar in terms of, if one particular project will be gaining more adoption than others, that's not necessarily a bad thing for the others. It's just going to push the overall industry into finding its own niche and specialization. And we already see that you cannot really have one blockchain for everything and one blockchain to rule them all, but most likely in the future, we would have this use-case-driven innovation where you would clearly have some

advantages from using one platform over another, or some definitely clearer advantages when it comes to using one blockchain or another. And that should not be something to be discouraged, that should be encouraged because nobody has the answers. And if we are doing this not for ourselves, like individuals, but in the bigger picture for humanity and society, I think that's the best outcome for humanity, having as many options as possible.

And especially when success is not a guarantee for any project, including Ethereum now. It's big, but who knows what will come next, or what will hold the future. I still think it's very well positioned, but who knows? And everything is in that position, saying otherwise it's like with the banks, it's too big to fail. We saw how that ended. Let's not repeat that mistake.