The Nordic countries, which once led the global cashless trend, have recently shifted their strategy. Sweden and Norway are now encouraging the retention of cash and exploring offline payment systems to address the vulnerabilities of digital payment systems. This change highlights the importance of physical cash as a backup. Ethereum founder Vitalik Buterin also believes that Ethereum should have resilience and privacy to serve as a "digital cash backup" when centralized systems fail.
Nordic Countries' Reflection on Cashless Society
Nordic countries, especially Sweden and Norway, had previously actively promoted a cashless society. However, according to The Guardian, these countries have recently become aware of the risks of over-relying on centralized digital payments. Concerns about system reliability during crises are one of the main reasons. As Computer Weekly points out, geopolitical and cyber threats have also prompted a reevaluation of purely digital payments. Norway has legislated fines for businesses refusing to accept cash, while Sweden encourages citizens to stockpile cash, reflecting an awareness of digital payment vulnerabilities.
Even in a digital society, cash remains an essential physical backup. According to Federal Reserve Services data, cash transactions still accounted for 14% of total payments in the US in 2024. Cash has unique advantages during crises like power outages and cyber attacks, as it does not rely on power networks (reference OpenDental Blog, Cash Essentials). Stores accepting only cash during power outages are a prime example, and low-income individuals and the elderly rely more on cash. The Nordic countries' consideration of an offline payment system also reflects concerns about centralized system vulnerabilities and a search for backup options.
Vitalik: Ethereum as a Digital Backup
Regarding the Nordic shift, Ethereum founder Vitalik Buterin commented that Ethereum has the potential to serve as a "digital cash backup" when centralized digital payments fail. He emphasized:
Nordic countries are withdrawing their cashless society initiatives because their centralized implementation was too fragile. It has proven that cash as a backup is necessary. Ethereum needs sufficient flexibility and privacy to reliably play this role.
Vitalik believes that Ethereum is strengthening system resilience and privacy through security initiatives and stateless clients, maintaining decentralization, and that DeFi and blockchain can provide transaction backups not controlled by centralized entities (as in Substack, XRPL).
Vitalik also responded to the utility of zk for secure private transfers, noting that zk solutions face certain limitations in widespread adoption, primarily due to the hardware for computing zero-knowledge proofs and preventing double-spending, which requires additional costs:
@rohangreyHas done a lot of in-depth thinking in this direction. We basically know how to do it, but there's a limitation that any solution relies on trusted hardware and/or post-facto enforcement against double-spenders.
