Vitalik Warns Crypto’s Biggest Risk Isn’t Hackers – It’s Something Worse

Vitalik Buterin sounds less interested in the next shiny cryptocurrency feature and more worried about what the crypto industry is actually building with the tools it already has and the main risk of eventual boredom.

In a new Chiang Mai interview with Foresight News writer Joe Zhou and the 706 community published on January 28, the Ethereum (ETH) co-founder argues that the crypto industry infrastructure has made real progress, but the application layer still hasn’t delivered the kind of “society-changing” use cases many promised.

He frames the past year as a story of contrast: scaling, wallets, and core plumbing improving, whereas the most visible “applications” often look like short-term speculation dressed up as innovation. As he said, the resulting boredom is the main risk for crypto:

“My biggest fear for the future right now is that the entire industry will eventually degenerate into a 100% coin-fixing place, with only speculation and no application. If that happens, by the time everyone gets tired of playing, the industry will die of boredom.”

Ethereum’s Tech Progress, Crypto’s App Problem

Buterin’s central point is that better tech doesn’t automatically produce better products. Even as Ethereum’s ecosystem pushes scaling forward and user experience improves, he says the space hasn’t produced enough apps that feel meaningful outside finance.

“Frankly speaking, Ethereum technology is not good enough now. While L2s solve the scalability problem, they are still mostly highly centralized. We need to make L2 more extreme and decentralized so that the application experience can truly catch up with Web2.”

He also pointed to governance as an area where crypto may have “succeeded” mechanically but failed socially. DAO token voting, in his view, still struggles with incentives and coordination, especially when large holders can sway outcomes simply by being large.

“Crypto has been successful in finance, but lost in governance, such as the current flaws in the DAO’s ‘token voting’ mechanism. The most typical example is the popularity of meme coins in recent years, when even Trump himself distributed them in early 2025. But I think when he greedily issued his second token, MELANIA, his first token, TRUMP, was actually declared dead.”

Prediction Markets, SocialFi, And The Oracle Risk

Buterin discussed prediction markets like Polymarket as proof that certain primitives work, but he argues the dominant markets tend to skew toward short-term, low-signal bets (sports outcomes, near-term price moves) instead of questions with lasting social value.

“If you look at the discussions on Twitter, Polymarket is often pushing the most questions right now about ‘which team will win next week’ or ‘whether Bitcoin prices will go up or down in an hour.’ I don’t think these short-term bets actually make much social sense in the long run. In theory, prediction markets are successful as a tool because they work, but we need more meaningful applications.”

On social finance (SocialFi), he warns that it is “currently in an awkward phase,” and when you weld money too tightly to attention, the financial incentives often backfire and overwhelm social incentives. In other words, users optimize for profit, and the content degrades into spam.

He also raises a risk that’s easy to underestimate: oracles. When on-chain outcomes depend on off-chain information, sometimes pulled from Web2 posts, maps, or headlines, one compromised or mistaken data source can swing settlement and payouts.

That’s not just a technical issue, he suggests, but a structural vulnerability for decentralized finance (DeFi) and real-world applications.

“Oracle data sources today, such as Web2 news websites and Twitter, have too low security standards. They never imagined that a message they sent would determine the ownership of $1 million on the chain.”

Why He Sees Crypto As An “AI Counterweight”

On artificial intelligence (AI), Buterin argues Ethereum’s “permissionless” nature matters more than ever: if AI agents need to hold assets or transact outside traditional banking rails, crypto may be the default option. 

“[Ethereum’s] core attribute is ‘permissionless,’ whether it’s humans, companies, or AI agents, they all have equal access rights. This means that AI can hold assets, conduct transactions, and even participate in the governance of DAOs on Ethereum. From this dimension, Ethereum is ready.”

But he cautions against forcing AI+crypto because it’s trendy and frames decentralization and blockchain as a broader defense against a future dominated by centralized AI power.

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