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- Vitalik Buterin recently stressed on X that Ethereum needs to boost its privacy features if it wants to stay useful in the financial world.
- His concern comes as countries like Norway and Sweden are encouraging people to hold onto cash again, for civil defense and emergencies.
Ethereum co-founder Vitalik Buterin recently emphasized the need for Ethereum (ETH), the second-largest altcoin with a market capitalization of $308 billion, to enhance its privacy. Otherwise, Ethereum risks becoming less viable for everyday use, potentially driving users toward centralized alternatives that offer greater confidentiality.
“Nordics are walking back the cashless society initiative because their centralized implementation of the concept is too fragile. Cash turns out to be necessary as a backup,” Buterin wrote, referencing a recent Guardian article titled “Back to cash: life without money in your pocket is not the utopia Sweden hoped.”
Ethereum needs to be resilient enough, and private enough, to be able to credibly play this kind of role.
Sweden has come a long way in its push toward a cashless society. By 2024, only around 1 in 10 in-store purchases were made with cash, a sharp drop compared to just a few years ago. This shift has been driven largely by the rise of digital payment options like Swish, a mobile app launched in 2012 by six major banks. Today, it’s used by over 8.5 million people, nearly the entire population.
But even with the convenience of digital payments, Swedish authorities are starting to rethink things. In November 2024, the Swedish Civil Contingencies Agency sent a brochure titled “If Crisis or War Comes” to every household, encouraging people to keep some cash on hand, just in case digital systems go down during an emergency.
Norway is following a similar path. While Vipps MobilePay, the country’s equivalent to Swish, remains hugely popular, the Norwegian government passed a law last year requiring retailers to accept cash or face penalties. Officials have also encouraged people to hold onto some physical money, citing concerns over digital systems being vulnerable to cyberattacks.
Buterin’s Privacy Vision
Vitalik published a proposal in April urging Ethereum to take a step forward on privacy. Instead of relying on separate privacy wallets or complicated workarounds, he suggested building privacy features directly into the Ethereum ecosystem. His idea? Let wallets come equipped with tools like Railgun or Privacy Pools so that users can make transactions from shielded balances by default, no extra steps needed.
Buterin’s touches on four main areas: making on-chain payments private, anonymizing network activity, and protecting how users read data from the chain. He also proposes using Verifiable Delay Functions (VDFs) to improve how Ethereum reaches consensus. These components, taken together, represent a push toward a more resilient Ethereum, one that can defend itself more effectively against both internal and external security threats.
At press time, ETH was trading at $2,567, showing solid momentum with gains of 2.9% in the last 24 hours and nearly 7% over the past week. Following a recent CNF report, Ethereum is losing its dominance and position to layer 2 networks like Polygon, Arbitrum, and Optimism.
