Ethereum’s Vitalik Buterin: Centralized Digital Currencies Without Privacy Are a Huge Step Back
Vitalik Buterin, the Ethereum co-founder, believes that mainstream adoption of digital currencies is inevitable, with or without blockchain, but will that currency be sovereign, corporate or decentralized?
Appearing on the Block TV podcast on March 4, Buterin said that central bank digital currencies (CBDC) and private stablecoins like Libra will exist in the near future but believes that non-inclusive “centralized chokepoints” of these institutional digital currencies will continue to steer adoption towards favouring decentralized cryptocurrency.
Challenges of Centralized Currency.
With each passing day, CBDC appears to be getting closer to realisation. Buterin believes these sovereign digital currencies will eventually see the light of day but highlighted the challenges these centralized projects will face. He explained the main problem is ”the concentration of power, the concentration or data collection — that you become dependent on potentially central intermediaries that can exercise a very fine-grained degree of control over who has the ability to participate in these systems and who can’t.”
Buterin alluded to the fact that these central controls or “chokepoints” allow the legacy institutions and sovereign infrastructures to exclude projects with little explanation. He said, “We've been seeing many situations where even things that are perfectly legal just end up getting restricted because whoever runs the centralized chokepoints just wants to exclude some category of users and I think those are reasons why people will continue to be interested in fully decentralized digital currency.” Facebook has recently taken a step back from Libra due to the regulatory backlash and pressure it has faced since the project was announced.
The Ethereum prodigy said that ultimately the market would lean towards decentralized currencies and that, “Centralized digital currencies without privacy are a huge step back” even more restrictive than our current systems of finance.
During the earlier parts of the podcast, Buterin said that scaling on public blockchains is soon going to be able to properly serve the needs of global enterprises and adoption is already underway.
As reported by Blockchain.News yesterday, global accounting firm EY, have launched their open-source Baseline protocol which aims to address privacy issues to encourage enterprise adoption of public Ethereum.
According to the announcement on March 4, the Baseline Protocols aim is to empower enterprises to adopt the public Ethereum blockchain for complex and confidential processes, without storing sensitive data on-chain.
Baseline was created by EY in collaboration with technology giant Microsoft and ConsenSys and is specifically designed for enterprises to build on top of the Ethereum public blockchain. The protocol heavily leverages Zero-Knowledge Proofs (ZKP), a kind of encryption that is used to verify information without actually exposing the information.