“I think that vision has been forgotten a bit, and I think one of the reasons it has been forgotten is basically because it was appreciated by the market,” Vitalik Buterin said.
Ethereum co-founder Vitalik Buterin argues that crypto payments “make sense” again as transaction costs will soon drop to fractions of a cent due to the Level 2 rollup.
The Cointelegraph team, which is currently attending Korea Blockchain Week (KBW), quoted Buterin as saying that the final hurdle to reducing large-scale transactions to fractions of a cent is blockchain data compression.
He pointed out that cumulative packages like Optimism’s Layer 2 scaling solution for Ethereum, which has been working to reduce the size and cost of data in blockchain transactions by introducing zero-byte compression, have “serious work” run:
“Today the transaction fee on aggregation is typically somewhere between $0.25, sometimes $0.10, and going forward on aggregation with all the efficiency improvements I’ve talked about. The cost of a transaction can go down to $0.05 or even $0.02. It’s a lot cheaper, a lot more accessible and completely groundbreaking.”
Although it primarily functions as a speculative store of value, Buterin emphasized that the key use case for Bitcoin (BTC) outlined in his 2008 whitepaper was to provide a “peer-to-peer e-money system.” , which is cheaper than traditional payment methods .
While this was true until 2013, Buterin says that was no longer the case in 2018 as adoption increased and blockchain transactions became too expensive.
“I think that vision was kind of forgotten, and I think one of the reasons it was forgotten is basically because it was appreciated by the market,” he said.
According to the Ethereum co-founder, BTC and other assets will soon be able to offer this use case again as scaling solutions – like Lightning Network in BTC’s case – gradually bring costs down to fractions of a cent.
Crypto Payment Options
Buterin outlined several areas where cheap crypto transactions would be particularly important. First, he referred to “low-income countries or places where the current financial system is not very efficient,” as it will provide citizens with access to vital internet payment structures that are already accepted despite the cost of international money transfers.
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Second, he noted that in the context of Ethereum, cheap crypto transactions would also help accelerate the adoption of non-financial applications such as DNS (Domain Name System) servers, human presence verification protocols, and Web3 account management services:
“You actually have to send a transaction to create a DNS name, you have to actually send a transaction to recover your account, you have to actually send a transaction to match some of these adjustments. If each of these surgeries costs about $11, people won’t do it.”
“Scalability isn’t just a boring thing that needs to go down in cost, scalability enables and I think actually opens up whole new classes of applications,” he added.