Ethereum (ETH) co-founder Vitalik Buterin is reportedly saying that central bank digital currencies (CBDCs) are not developing in the way he once hoped.
In a new interview with CNBC, Buterin says he was once again optimistic about CBDCs, but now he believes they have mainly become “front ends” for the traditional banking system.
“[The CBDC] space is where I think five years ago I had a little more hope, probably naively, 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 of these projects reaches a certain maturity, [they] everything falls away as the thing gets closer and closer to a 1.0. We end up with systems that are actually not much better than existing payment systems, because in the end they are just other front-ends for the existing banking system.”
According to Buterin, CBDCs are unlikely to be private digital assets. Instead, he says CBDCs will allow the government and companies to monitor the financial transactions of those who use them.
“They are ultimately even less private and essentially break down all existing barriers against both corporations and government at the same time.”
The former billionaire goes on to say that Ethereum will likely be more resistant to government interference, especially now that the leading smart contract protocol adopts a proof-of-stake consensus mechanism.
“Proof-of-stake is actually easier to anonymize and harder to close than proof-of-work. Proof-of-work requires enormous amounts of physical equipment and requires enormous amounts of electricity. These are exactly the kinds of things that drug enforcement agencies have decades of experience with.”
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