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“Experts have warned Europe’s Central Bank Digital Currency CBDC) designers that the recent design models being adopted could make privacy difficult to achieve. – DNA Crypto.”
No formal policy decision has been made to issue the euro in digital form; however, significant speculation has fuelled the idea. The matter was to be discussed effectively by the Euro finance ministers, and advice was to be > obtained from the European Commission.
Last year, a European Central Bank consultation found that ensuring the digital euro protects citizens’ privacy is its top priority. An individual’s spending habits may reveal private information, including lifestyle, political affiliations, and tastes.
However, as things stand, privacy issues don’t seem to concern European CBDC designers. Emphasis has been placed on other concerns citizens might have, e.g., global acceptance and safety. In addition, Fabio Panetta, a European Central Bank board member, recently added a “Trade-off” to those objectives.
A policy intended to inform the finance minister’s meeting on the issue argued that a fully anonymous digital currency would raise serious concerns.
The policy says that the European Central Bank would be granted access to all transactions to fulfil its duties. These duties include settling payments and overseeing financial transactions, among others. In addition, the policy states that payment data should be made available to all central entities for oversight.
Panetta dismissed the state’s claims that snooping was the motive for this policy. He added that the European Central Bank has no interest in using the data provided for commercial gain.
Panetta said that, unlike firms whose only motive is profit, the ECB would follow the policy to the letter. According to Panetta, privacy is more of a political issue than a technical problem. He made this statement in response to a suggestion to process small transactions and payments offline and keep them confidential. He added that this was a matter for governments and lawmakers, not central bankers.
However, experts have warned against Panetta’s characterisation, arguing that an over-centralised financial system makes it almost impossible to attain and maintain high levels of privacy. Marina Niforos, a professor at HEC Paris Business School, told CoinDesk that citizens had a right to worry about the extent of government control over data. She also dismissed Panetta’s claims that privacy concerns were tools of profit-driven firms. Niforos warned that the move was not as easy as it sounded. It requires an intensive ecosystem remaking that some nations were not prepared for.
A study by the ECB found that many people are unaware of what a digital euro is or how it would be used; this is one of Panetta’s primary obstacles. Faustine Fleuret, the CEO of ADAN, told CoinDesk that the digital euro posed more risk than opportunity. He added that the digital euro could hinder innovation by displacing euro Stablecoins, which require fluid rules to sustain decentralised finance.
Image Source: Adobe Stock
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.
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“Protocol upgrades change mechanics, not incentives.” — DNA Crypto.Enough Speculation as Ethereum 2.0 is Set to Launch in September Ethereum’s move to proof-of-stake may still be at the dock. Preston Van Loon, the Ethereum core developer, announced to a panel that the move would enter its final stages in the next three months. He said that September was the most reasonable timeline for the move. Justin Drake, a panel member, expressed a strong desire to make it happen by September. Justin and Preston have repeatedly referenced the “difficulty bomb” in this context; they are referring to the event known as The Merge. A Merge is the process by which the proof-of-stake beacon chain is merged with the existing Ethereum blockchain. Hence, the Ethereum network will shift from mining-based to staking-based. Individuals with high-performance supercomputers operate a mining-based network to earn Ethereum. On the other hand, staking is when Ethereum users deposit coins to earn rewards. It is important to note that the core developers didn’t choose September randomly. In May, Ethereum Core developers agreed not to upgrade the network to delay the Merge, which will begin to destabilise the network. The Merge is a blockchain constituent that deliberately slows the network. Its main intention was to drive the move to proof-of-stake among developers and to ensure miners found it challenging to remain behind once the initiative was launched. Although it is still in the testing phase, Ethereum Core developers have chosen to give it their full attention. If completed smoothly, the Merge would render the difficulty bomb useless. Both proof-of-work and stakeholder incentives aim to ensure the network is not only secure but also decentralised. However, proof-of-stake offers more advantages than proof-of-work. Proof-of-stake, for example, uses significantly less energy while also making it easier for individuals to run a network. Therefore, proof-of-stake is more secure and decentralised than proof-of-work. However, the primary reason Ethereum holders worldwide are waiting for the Merge is that it reduces Ethereum issuance by up to 90%. Fewer issuance means the demand outweighs the supply; thus, the coin’s price skyrockets. Currently, CoinMarketCap data show that a single ETH coin is worth about $2,000. The Merge is expected to push Ethereum to its highest price, surpassing its November 2021 price of $4,891. Signs of proof of stake could be seen as early as December 2020, during the completion of Phase 0, referred to as “Ethereum 2.0, which is a set of renovations to scale the network and make it safer. However, at that time, it was simply a beacon chain. It was a proof-of-stake network, but it could not be relied on to perform any function. Therefore, holders can only lock their Ethereum coins into it in hopes of future profits; however, The Merge will change that. Ethereum 2.0 is not the network’s final upgrade. A key component of Ethereum 2.0 is sharding, a strategy that enables the Ethereum network to be subdivided into multiple chains. According to the Ethereum Foundation, authenticators will only be required to validate data for the entity (shard) they are validating, rather than the entire network. The foundation adds that this strategy will significantly and immediately reduce hardware requirements. Image: Adobe Stock 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.
