Ethereum co-founder Vitalik Buterin has argued that crypto payments will “make sense” again as transaction fees will soon drop to fractions of a cent due to layer-2 rollups.
The Cointelegraph team currently on site during the Korea Blockchain Week (KBW) quoted Buterin as saying that the last hurdle to scale transactions down to fractions of a cent is blockchain data compression.
He pointed to “solid work happening” with roll-ups right now, such 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 rollups, transaction costs are generally somewhere between $0.25, sometimes $0.10, and in the future with rollups with all the efficiency improvements I talked about. The transaction costs can go down to $ 0.05, or even as low as $0.02. So much cheaper, much more affordable and a complete game changer.”
Despite acting primarily as a speculative store of value, Buterin stressed that the main use case of Bitcoin (BTC) presented in his 2008 white paper was to provide a “peer-to-peer electronic money system” that cheaper than traditional payment methods.
But while that was the case until 2013, according to Buterin, it was no longer the case in 2018 as adoption increased and blockchain transactions became too expensive.
“It’s a vision that I think has been kind of forgotten and I think one of the reasons it’s been forgotten is that it’s been priced out of the market,” he said.
According to the Ethereum co-founder, BTC and other assets will soon be able to provide this use case again, as scaling solutions — such as the lightning network in BTC’s case — gradually reduce costs to a fraction of a cent.
Crypto Payment Usage Scenarios
Buterin outlined a number of different areas where low-cost 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 essential payment structures over the internet, something that has already been adopted despite the cost of international remittances.
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Second, he noted that low-cost crypto transactions in the context of Ethereum will also help accelerate the adoption of non-financial applications such as domain name system (DNS) servers, humane proof of presence protocols, and Web3 account management services.
“You actually have to send a transaction to create a DNS name, you actually have to send the transaction to recover your account, you actually have to send a transaction to meet some of these adjustments. If performing each of that operations cost about $11, people don’t go into it.”
“Scalability isn’t just some boring thing where you just want the cost figures to go down in scalability, I think it basically enables and unlocks completely new types of applications,” he added.