Sweden Norway Reverse Cashless Push Sparking Crypto Debate

Sweden and Norway have recently reversed their initiatives to become cashless societies. This shift comes after the realization that their centralized payment systems are vulnerable to infrastructure failures, which can paralyze entire payment networks. The move has sparked discussions in the crypto world about the potential of decentralized systems to serve as resilient alternatives to traditional payment networks.

Ethereum co-founder Vitalik Buterin suggested that decentralized systems like Ethereum could potentially fill this role. However, he acknowledged that significant technical challenges remain. Buterin pointed out that for Ethereum to be a viable alternative, it needs to be resilient and private enough to handle the role of a backup payment system. He highlighted that while Ethereum has the potential, it currently lacks the offline functionality necessary to operate without electricity or internet connectivity.

Some crypto experts believe that decentralized finance (DeFi) protocols are already robust enough to handle such responsibilities. Sam MacPherson, CEO of decentralized finance protocol development firm Phoenix Labs, argued that Ethereum is already designed to be resilient against hostile actors. He cited the management of billions of dollars through DeFi protocols without major failures as evidence of this resilience. However, MacPherson also acknowledged that offline functionality is a primary challenge for Ethereum.

Zero-knowledge proofs, which could theoretically enable offline payments, remain experimental and depend on trusted hardware. Buterin noted that while the technology exists, it is not yet practical for widespread use. Another potential solution is stablecoins, which are pegged to fiat currencies. Anthony Anzalone, founder of walletless blockchain platform XION, suggested that stablecoins could be an exact solution to this scenario, as they are not reliant on one centralized party and have seen increased usage and adoption.

However, stablecoins also face questions about resilience, especially in terms of privacy. Harrie Bickle, documentation lead at AI-powered orchestration layer NodeOps, pointed out that while there are privacy protocols with the potential to make Ethereum private enough to act as a meaningful alternative to cash, resilience is another issue altogether. Bickle highlighted that Ethereum would need to overcome significant challenges, such as the requirement for users to have access to electricity, secure operating systems, and unhackable Web3 wallets, before it could replace cash transactions.

In summary, the reversal of cashless society initiatives by Sweden and Norway has opened up a discussion about the potential of decentralized systems like Ethereum to serve as resilient alternatives to traditional payment networks. While there are significant technical challenges to overcome, the potential for decentralized systems to provide a more resilient payment infrastructure is a topic of ongoing debate in the crypto community.