Crypto Payments will make sense as transaction costs fall to mere cent
Ethereum co-founder Vitalik Buterin has argued that
owing to layer-2 rollups, transaction costs would soon plummet to fractions of a penny, making crypto payments "make sense" once again.
On Monday at Korea Blockchain Week (KBW), Ethereum co-founder Vitalik Buterin highlighted that blockchain data compression is the final barrier to scaling transactions to fractions of a penny.
He said that there is currently "solid work happening" with roll-ups such as Optimism's layer-2 scaling solution for Ethereum, which has managed to reduce the size and cost of data in blockchain transactions by implementing zero byte compression.
“So now, with roll-ups, transaction costs are generally between $0.25 and $0.10, and in the future with roll-ups, with all of the efficiency enhancements that I mentioned. The transaction costs might be reduced to $0.05 or perhaps $0.02. So much cheaper, much more accessible, and such a game changer.”
Despite serving largely as a speculative store of wealth, Buterin stressed that the fundamental use case of Bitcoin (BTC) stated in its white paper from 2008 was to create a "peer-to-peer electronic currency system" that was less expensive than existing payment methods.
However, according to Buterin, while this was true until 2013, it was no longer the case in 2018 as usage rose and blockchain transactions became prohibitively costly.
“It's a vision that, he believes, has been somewhat forgotten, and one of the reasons for this, is that it has been priced out of the market,” he said.
According to the Ethereum co-founder, BTC and other assets will soon be able to serve this use case again as scaling technologies — like as BTC's lightning network — eventually, reduce prices to fractions of a penny.
Crypto payment use cases
Buterin highlighted a few other instances where inexpensive crypto transactions will be very useful. First, he referred to low-income nations or areas where the present financial system is ineffective, as it would provide individuals with access to crucial payment structures via the internet, which is already being used despite the high cost of international remittances.
Second, in the context of Ethereum, he observed that low-cost crypto transactions will aid in the development of non-financial applications such as domain name system (DNS) servers, humanism proof of attendance protocols, and Web3 account management systems.
“You must actually submit a transaction to generate a DNS name, you must actually send a transaction to restore your account, and you must actually send a transaction to fulfill some of these changes. People will not participate if each of those operations costs more than $11.”
He said , "Scalability is not just like some boring thing where you simply need cost figures to go down scalability, I believe it allows and unlocks completely new classes of applications.”
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