Vitalik Buterin: The potential of Ethereum as "Digital Cash"

Author: Vitalik Buterin; Source: bitcoin.com Despite the declining usage of cash in modern payment systems year by year, which is gradually being phased out, it still holds significance as an important backup payment method, or its alternatives in special circumstances. Vitalik Buterin, the co-founder of Ethereum, commented that Ethereum needs to possess the characteristics of cash in order to fulfill this role.

Buterin was inspired by the recent comments from the Swedish central bank about re-encouraging the use of cash in the context of global conflicts when discussing this topic on social media. ! WHNhvK6yskgLDzucNr9R9OPg0eBtAoHJSihgcWLc.png Sweden has one of the lowest rates of cash use in the world, but its central bank assesses that the use of cash has become crucial in a situation where hybrid attacks could affect critical infrastructure. In its report, the bank noted:

“Measures need to be taken to strengthen preparedness and reduce exclusion, so that everyone can make payments even in times of crisis or war.”

Buterin explained that this reflects how these countries are retreating from the previously advocated “cashless utopia” due to the inherent flaws in its centralized implementation, making cash a necessary backup option in such extreme circumstances.

“Ethereum needs to be sufficiently resilient and private to reliably play such a role,” Buterin summarized, emphasizing the necessity of hardcoding decentralized, offline, and private payment functionalities into the Ethereum blockchain.

Although developing such systems may face complexities, especially at the design level, Buterin pointed out that Ethereum has made significant progress in this regard.

“We basically know how to do it, but there are limitations, namely that any solution relies on trusted hardware and/or post-execution against double spenders,” Buterin acknowledged the limitations of their current approach and emphasized these key dependencies.