Vitalik Buterin Hints Ethereum Could Replace Centralized Systems: Details

Vitalik Buterin has teased another opportunity for Ethereum to take on centralized systems. This is because Sweden and Norway have been working to become less dependent on fiat currencies. Most payments in these countries use digital systems like apps and payment cards. However, recent events have shown the risks of relying too much on these centralized systems. 

Both countries have now asked their citizens to keep some cash as a backup. This situation has raised interest in decentralized systems like Ethereum (ETH). Vitalik Buterin, Ethereum co-founder, believes the network could be safer if regular payment systems fail.

Why Centralized Payment Systems Are Vulnerable

In Sweden, cash was used for only about 1% of all payments. In Norway, most payments were made using the Vipps app. However, the war between Russia and Ukraine shows how weak these systems can be.

Attacks on physical infrastructure, such as power and the internet grid, can completely stop digital payments. As a result, the Swedish and Norwegian governments have said keeping some cash for emergencies is essential.

Buterin Sees Ethereum as a Decentralized Alternative

In light of these events, Ethereum’s creator pointed out that blockchain networks could fill this gap. Ethereum runs on a decentralized system, meaning no one government or company controls it. 

Vitalik asserted that this makes it more secure and less likely to fail under pressure. Some experts say Ethereum is already strong enough to handle large amounts of digital transactions without failure, thanks to recent system updates like Pectra. 

Decentralized finance (DeFi) protocols built on Ethereum handle billions of dollars safely and reliably. They are built to resist hacking and censorship from the start. Despite these strengths, Ethereum has a major weakness when replacing cash. 

Currently, using the Ethereum network requires a working device, a secure wallet, and internet access. This could be a serious problem in times of war, natural disasters, or cyberattacks. On the bright side, Buterin said ideas are being developed to fix this. 

He noted that technologies like zero-knowledge proofs can enable offline Ethereum payments. However, these solutions are still in the early stages and rely on trusted hardware that is not widely available.

Notably, ongoing development and innovation may make this possible in the future.

Stablecoins Could Support Unstable Economies

Ethereum co-founder also pointed out that Sweden and Norway could consider adopting stablecoins as other options. Stablecoins are digital currencies linked to real-world currencies like the US dollar. 

These crypto asset classes have become popular because they provide a stable value and do not depend on a single central authority. Crypto assets like stablecoins could help when traditional currencies are unstable or governments are weak. 

However, stablecoins are not without problems. To truly replace cash, they need to improve privacy and security. They also rely on internet access, which can be a challenge.