Back to the list

Vitalik Buterin Warns CBDCs Moving in Wrong Direction, Calls Them ‘Front Ends’ for the Banking System: Report

source-logo  dailyhodl.com 24 September 2023 22:05, UTC

Ethereum (ETH) co-creator Vitalik Buterin reportedly says that central bank digital currencies (CBDCs) are not developing in the way he had once hoped for.

In a new interview with CNBC, Buterin says that he was once more optimistic about CBDCs, but now he believes they have mostly become “front ends” for the traditional banking system.

“[The CBDC] space is where I think I had somewhat more hope, probably naively, five years ago, because there were a lot of people who wanted to do things like make them blockchain-friendly, give actual transparency and verifiability guarantees, and some kind of level of actual privacy…

As each and every one of those projects come to a certain maturity, [they] all sort of fall away as the thing comes closer and closer to being a 1.0. We get systems that are not actually much better than existing payment systems because they just basically end up being different front-ends for the existing banking system.”

According to Buterin, CBDCs likely won’t be private digital assets. Instead, he says CBDCs will allow the government and corporations to monitor the financial transactions of those who use them.

“They end up being even less private and basically break down all of the existing barriers against both corporations and the government at the same time.”

The former billionaire goes on to say that Ethereum may be more likely to stand up to government interference, especially now that the leading smart contract protocol is running a proof-of-stake consensus mechanism.

“Proof-of-stake is actually easier to anonymize and harder to shut down than proof-of-work is. Proof-of-work requires huge amounts of physical equipment and requires huge amounts of electricity. These are exactly the kinds of things that drug enforcement agencies have decades of experience detecting.”

Generated Image: Midjourney