The co-founder of Ethereum, Vitalik Buterin has claimed that cryptocurrency payments will “make sense again” as transaction costs will soon drop to fractions of a cent thanks to Layer 2 rollups..
The Cointelegraph team currently at Korea Blockchain Week (KBW) quoted Buterin as stating that the final hurdle to getting transactions down to fractions of a cent at scale is blockchain data compression.
He noted the “solid work going on” with rollups at the momentsuch as Optimism’s layer 2 scaling solution for Ethereum, which has worked to reduce the size and cost of data in blockchain transactions by introducing zero-byte compression:
“So today with roll ups, the transaction fees are generally between $0.25, sometimes $0.10, and in the future with roll ups with all the efficiency improvements that I’ve talked about. Transaction costs could drop to $0.05, or even $0.02. Much cheaper, much more affordable, and a complete game changer.”
Despite functioning primarily as a speculative store of value, Buterin underscored that the key use case for bitcoin (BTC) presented in its 2008 white paper was to provide a “peer-to-peer electronic money system” that was cheaper than traditional payment methods..
While that was true until 2013, according to Buterin, this ceased to be the case in 2018 when adoption increased and blockchain transactions became too expensive..
“It’s a vision that’s been kind of forgotten, and I think one of the reasons it’s been forgotten is basically because it was priced into the market,” he said..
According to the co-founder of Ethereum, BTC and other assets will soon be able to offer this use case again as scaling solutions – like the Lightning Network in the case of BTC – gradually reduce costs to fractions of a cent..
Use cases of crypto payments
Buterin highlighted a couple of different areas where cheap crypto transactions will be particularly important. First, he pointed to “lower income countries or places where the existing financial system is not very effective”as it will give citizens access to the vital payment structure through the Internet, something that is already being adopted despite the cost of international remittances.
Second, he pointed out that In the context of Ethereum, cheap crypto transactions will also help drive the adoption of non-financial applications, such as domain name system (DNS) servers, proof-of-attendance protocols, and account management services. Web3:
“You have to send a transaction to create a DNS name, you have to send a transaction to recover the account, you have to send a transaction to fulfill some of these adaptations. If it costs like $11 to do each of those trades, then people aren’t going to get into it.”
“Scalability is not just some boring thing where you just need to get the cost numbers down, I think it really enables and unlocks entirely new classes of applications,” he added..
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