In a recent blog post, Ethereum co-founder Vitalik Buterin expressed concern over the shift away from the original vision of Web3 and the core principles of decentralization within the cryptocurrency community.

Cypherpunk vision fading away

Buterin highlighted in his December 28 blog post the diminishing focus on decentralization, citing a growing ideological divide where some in the non-blockchain decentralization community view the crypto world as a distraction rather than a kindred spirit. He attributed this shift to the rise in transaction fees, making it economically challenging for developers to create diverse applications beyond financial use cases.

It is important to understand that a cypherpunk is someone who utilizes encryption techniques to protect their privacy while accessing a computer network, particularly from government authorities.

The Ethereum co-founder identified escalating transaction fees as the primary driver behind the community’s pivot away from the decentralized ethos. Buterin emphasized that when transaction fees become exorbitant, the user base tends to skew towards high-risk traders, colloquially known as “degen gamblers.” This shift in user demographics has altered public perception and the internal culture of the crypto space.

Despite these challenges, Buterin outlined positive developments within Ethereum during 2023. He emphasized advancements in scaling solutions such as rollups, second-generation privacy solutions, and the emergence of account abstraction and light clients. These developments offer hope for a revival of the decentralized ethos and a move away from unchecked centralization and over-financialization.

Ethereum’s future: A hub for diverse applications

Buterin envisions Ethereum becoming a hub for various applications, ranging from decentralized social media to secure, anonymous voting systems. He highlighted the increasing developer-friendliness of zero-knowledge proofs, opening new possibilities for consumer applications and privacy-preserving technologies. This, according to Buterin, enables a departure from the false binary of anonymity versus safety, allowing for privacy and various forms of authentication simultaneously.

In a call to the Ethereum community, Buterin urged a return to the core values of open global participation, decentralization, censorship resistance, auditability, credible neutrality, a cooperative mindset, and tool building. He warned against succumbing to pressures that could lead to the creation of highly centralized systems within the crypto ecosystem, emphasizing the risk of losing the unique value of the crypto space.

Cypherpunk revival needed

Buterin emphasized the need for Ethereum to reignite the “cypherpunk” revolution, which envisions a public decentralized shared hard drive with peer-to-peer messaging and decentralized file storage. He hoped that non-financial applications could flourish on the blockchain by upholding cypherpunk values such as decentralization, open participation, censorship resistance, and credible neutrality.

Despite the challenges, Buterin expressed optimism about the industry’s ability to address problems. He highlighted solutions provided by decentralized exchanges to mitigate hacks on centralized exchanges and innovations like Cowswap, Flashbots Protect, and MEV Blocker, which help limit the severity of certain attacks on Ethereum users.

In a recent proposal, Buterin suggested making the Ethereum proof-of-stake chain “lighter” and “simpler” by reducing the number of signatures required from validators. This proposal aligns with his vision for a more efficient and streamlined Ethereum network.