Why Vitalik Buterin has serious concerns about CBDCs
Vitalik Buterin expresses serious concerns about CBDCs. At first he was optimistic, but now he recognizes the increasing danger of these systems. According to him, this is due to very specific experiences.
Why Vitalik Buterin has serious concerns about CBDCs
In an interview with CNBC, Ethereum inventor Vitalik Buterin expresses serious concerns about CBDCs. The Canadian citizen believes a trend among central bank digital currencies is revealing.
Editors would initially like to present CBDCs as a product that respects the privacy of its users. As the maturation process progresses, this would prove to be a deception.
When each of these projects reaches a certain level of maturity, all privacy somehow disappears. Systems are emerging that are actually not much better than existing payment systems because they are basically just different front ends for the existing banking system.
Barriers that were previously created specifically to prevent control by individual companies or authorities would suddenly disappear. Vitalik Buterin himself could not have foreseen from the outset that this trend would develop – even though the hard core of the crypto scene has long been expressing concerns about CBDCs.
The programmer was not one of the people who was in clear opposition to central bank digital currencies from the start. Buterin believed that the necessary simplicity and security that cryptocurrencies strive for could be achieved through CBDCs.
The 29-year-old believed in CBDCs being shaped by the principles of cryptocurrencies – neutrality, immutability and anonymity. He is now disillusioned.
This was an area where I – probably naively – had a little more hope five years ago, because there were a lot of people who wanted to provide things like blockchain-friendly solutions, actual transparency and verification guarantees, and a certain level of privacy.
The Chinese digital yuan and the Nigerian eNaira are particularly well known. In Switzerland, the SNB is not interested in a CBDC for end customers, but is currently developing a project for the use of banks.
Cryptocurrencies are finding safety in developing countries
Many industrialized countries are working or researching their own CBDCs. An order from US President Joe Biden in 2022 caused a stir. In it, the Democratic politician called for the US government to create a plan outlining how it could integrate a CBDC.
The European Union is working on a digital euro, which is expected to enter an initial test phase in 2024 and may be fully used from 2026. Many governments are responding to the increasing popularity of cryptocurrencies with their own CBDCs.
They want to create a digital counterweight to the free currencies that copies some aspects – such as ease of use – but reserves control over the currency to the government.
Vitalik Buterin is still convinced of the financial revolution that cryptocurrencies are set to bring about. Developing and emerging countries are the guarantor of this. In the spring in Africa he already experienced how the use of crypto in everyday life was taking concrete shape.
A lot of people in Argentina are also convinced of crypto. The South American country is known for its weak currency.
Despite systemic differences between CBDCs and crypto, according to the programmer’s experience, both types of currencies are far too similar – and that is a big risk for crypto.
I’ve found cafes without even looking that happen to accept Bitcoin and Ether – but the problem is that they all use Binance.
This situation must change in order to actually enjoy the advantages of crypto. To do this, users must switch to systems that allow self-management of the coins.
