Vitalik Buterin has outlined his ideas on what kinds of projects inside the Ethereum ecosystem may operate as critical cornerstones of what Ethereum’s future might look like.
In a blog post, Buterin shares that he’s excited about Ethereum-based projects that are working on DAO-governed stablecoins with a focus on real-world assets and zero-knowledge decentralized identities. According to to the Ethereum co-founder, the recent collapse of FTX has had a benign impact on the crypto market and its wide array of users, to the extent that the very idea of decentralization might be put to question and rendered uncertain.
To , stablecoins issued with a strong decentralized autonomous organization (DAO) forming a pillar behind its governance would provide users with better benefits in terms of utility as a currency, for the longer term. In terms of the use of crypto as a replacement or subsumption of traditional fiat currency, this Buterin argues that using crypto for transactions instead of using cards that link one’s personal identity through banks actually echoes what cash transactions have long preserved: privacy.
“There is also the important broader philosophical case for cryptocurrency as private money: the transition to a “cashless society” is being taken advantage of by many governments as an opportunity to introduce levels of financial surveillance that would be unimaginable 100 years ago. Cryptocurrency is the only thing currently being developed that can realistically combine the benefits of digitalization with cash-like respect for personal privacy.” Buterin opines.
In terms of the interoperability of decentralized identity, Buterin believes that digital identity is essential to allow for multiple blockchain-based identities to co-exist, with more heft place on the value of interoperability as a principle for essentially binding together all possible platforms into a shared, commonly usable space.
Examples of use cases alongside this decentralized identity stack includes projects such as the Ethereum Name Service (ENS), a development protocol that assigns human-readable names to Ethereum addresses. Another example is the work behind Sign In With Ethereum (SIWE), which enables users to opt to sign or log on to websites that do require some degree of identity, all with the use of any number of Ethereum addresses which they can prove to be their own. Such projects preserve privacy, while also allowing Ethereum users to more easily and seamlessly interface with decentralized applications and platforms.
By extension, these technologies further the cause of decentralization within the Ethereum ecosystem. Other examples of these include proof of humanity, for the case of DAOs which attract a large number of contributions for improvement, as well as “attestation” mechanisms which create blockchain-based proofs of a unique user’s participation within a DAO’s governance model. Buterin says that such tools can also be used in conjunction and applied to use cases such as treating and filtering spam on chat platforms such as Blockscan by drawing correlations between a user’s on-chain activity. On a similar note, this kind of use case can also be applied to replace traditional KYC (Know Your Customer) methods of user verification by requiring analysis of on-chain activity, instead of requiring proofs of identity which may be faked.
“Many of these applications are being built today, though many of these applications are seeing only limited usage because of the limitations of present-day technology. Blockchains are not scalable, transactions until recently took a fairly long time to reliably get included on the chain, and present-day wallets give users an uncomfortable choice between low convenience and low security. In the longer term, many of these applications will need to overcome the specter of privacy issues.” Buterin shares.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.