Ethereum co-founder, Vitalik Buterin, has argued that layer-2 scaling will make crypto payments ‘make sense’ again. Buterin assured that the overall transaction costs will fall to fractions of cent due to the massive campaign around layer-2 rollups. “ I think it’s a vision that has been. One of the reasons why crypto payments seems to be forgotten is basically because it got priced out of the market,” Buterin said.
Buterin made this argument during the Korea Blockchain Week (KBW). The KBW attracted the attention of the world even though AdaTimeStamp launches new NFT that makes the tradeable. During his presentation, Buterin said for the crypto market to get transactions down to fractions of a cent, the market must be ready to compress blockchain data. He pointed out that solid work was currently ongoing around rollups like Optimism’s layer-2 scaling solution for Ethereum. Buterin said Etherum has successfully scaled down the cost and size of data in blockchain transactions by introducing zero byte compression.
“So today with roll ups, transaction fees are generally somewhere between $0.25, sometimes $0.10, and in the future with roll ups with all of the improvements to efficiency that I talked about. The transaction costs could go down to $0.05, or even maybe as low as $0.02. So much cheaper, much more affordable, and a complete game changer,” Buterin said.
The introduction of Bitcoin (BTC) in 2008 revolutionized the global financial landscape. According to Bitcoin’s whitepaper, the token was created to provide a “peer-to-peer electronic cash system,” where users will enjoy lower transaction costs compared to traditional payment methods. However, Buterin argued that lower transaction costs were only tenable up until 2013, and that the situation has since changed since 2018 when blockchain adoption made crypto transactions to become expensive.
In Buterin’s view, cryptocurrencies like Bitcoin and Ethereum will soon re-ignite the spirit of lower transaction fees once again, as BTC launches scaling solutions like the Lightning Network, which will bring down crypto transaction costs to fractions of a cent.
Crypto payment use cases
Buterin highlighted some areas where lower crypto transaction fees will be much appreciated. First, he pointed at countries with low per capita income and places where residents frown at the present financial system. He said lower crypto transaction fees will give citizens access to a quick and efficient payment structure over the internet, compared to what traditional financial service providers currently charge.
Secondly, he argued that lower crypto transaction fees will help speed up the adoption process of non-financial applications like the Web3 account management services, domain name system (DNS) servers, and humanity proof-of-attendance protocols.
He added, “you need to actually send a transaction to create a DNS name. If this process costs like $11, then people are not going into it.”