Transaction Costs Deter ‘Regular People’ From Using Crypto, Says Vitalik Buterin

In addition to the decentralization of finance, cryptocurrency exchanges can and should play an active role in the democratization of finance, fostering cheap and instantaneous transactions for people everywhere.

That’s according to Ethereum founder Vitalik Buterin, who shared his vision of wider use of crypto in a wide-ranging CNBC interview.

Buterin Criticizes Dominant Crypto Exchanges

In the course of the interview, Buterin criticized “centralized actors” that in his view take up a disproportionate share of the market and make life harder for small, decentralized finance (DeFi) platforms. In his view, it is the latter that hold out hope for a better world.

Buterin made a case for wooing “regular people” with the benefits of cryptocurrencies. In order for this to happen, costs, obviously, must be low enough that people will not associate crypto trading purely with institutional and sophisticated investors of means.

Buterin also criticized random technical glitches that can make the experience of using crypto frustrating and off-putting for some.

“We need it to actually be possible to do Ethereum payments in a way where the transaction fee is less than five cents a transaction; in a way where the experience doesn’t suck and randomly fail 2.3% of the time; in such a way that you need a Ph.D. in Ethereum sciences to actually figure out what’s going on,” Buterin said.

Buterin also discussed the issue of privacy and security in a sector where hacking runs rampant.

“People need to have wallets that are actually secure, where if they lose the keys, they’re not going to lose everything,” he said.

Buterin Questions the Value of CBDCs

What role can or should central bank digital currencies (CBDCs) play in the evolving blockchain and paperless payment space? Buterin faulted them for not really offering an alternative to traditional payment systems.

“We get systems that are actually not much better than existing payment systems, because they just basically end up being different front-ends for the existing banking system,” Buterin said.

And that is not the only problem with CBDCs, in Buterin’s eyes.

“They end up being even less private and basically break down all of the existing barriers against both corporations and the government at the same time,” he said.

From the point of view of privacy, Buterin was emphatic on the need for proof-of-stake. He voiced a clear preference for proof-of-stake over certain alternatives.

“Proof-of-stake is actually easier to anonymize and harder to shut down than proof-of-work is,” Buterin said.

Buterin Criticizes Proof-of-Work as Impractical

He went on to blast the latter protocol for the “huge amounts” of physical equipment and electricity that proof-of-work requires.

Indeed, proof-of-work has come in for wide criticism for consuming amounts of energy comparable to those of a small country.

Learn more about Ethereum, the case for proof-of-stake, and Ethereum’s transition to proof-of-stake.

These characteristics make proof-of-work susceptible to easy detection by centralized authorities, like drug enforcement agencies, Buterin said.

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