Vitalik: Layer-2 scaling will make crypto payments ‘make sense’ again — KBW 2022

Vitalik Buterin, co-founder of Ethereum, has stated that crypto payments will again “make sense” because transaction costs will soon drop to fractions a cent thanks to layer-2 rollups.

Buterin was quoted by the Cointelegraph team at Korea Blockchain Week (KBW), as saying that blockchain data compression is the last hurdle in reducing transaction costs to fractions per cent.

He pointed out that there was “solid work” being done with roll-ups right now, such as Optimism’s layer-2 scaling solution to Ethereum. This has helped to reduce the cost and size of blockchain transactions by introducing zero byte compression.

Today transaction fees with roll-ups are usually $0.25 to $0.10 and will go down with roll-ups that incorporate all the efficiency improvements I mentioned. Transaction costs could drop to $0.05 or $0.02. It’s so much easier, cheaper, and more affordable. This is a game-changer.”

Although Bitcoin is a speculative store value, Buterin highlighted the main use case for Bitcoin (BTC), which was presented in its whitepaper from 2008: to provide an “peer-to peer electronic cash system”, that was more affordable than traditional payment methods.

Buterin says that while this was true until 2013, it wasn’t the case in 2018. As adoption increased and cryptocurrency transactions became more expensive, it changed.

He said, “It’s an idea that has been, i think, forgotten a bit, and I think one reason why it hasn’t been forgotten is basically that it got priced out the market.”

According to the Ethereum co-founder, BTC and other assets are soon able to provide this usecase once again as scaling solutions. This includes the lightning network in BTC. It will gradually bring down the cost to fractions of cent.

Use cases for crypto payment

Buterin highlighted a few areas where cheap crypto transactions will be especially important. He first mentioned “lower income places or places where the current financial system is not very efficient”, as this will allow citizens to access vital payments structures over the internet. This is something that is already being adopted, despite the high cost of international remittances.

Related: StarkWare founder suggests that 60 million NFTs can be created in one transaction.

He also noted that, in the context Ethereum, low-cost crypto transactions will help increase adoption for nonfinancial applications like domain name system servers, humanity proofof attendance protocols, and Web3 account management.

To create a DNS, you must send a transaction. To recover your account, you must send a transaction. People won’t bother to do these operations if they cost $11 each.

He said that scaling is not just boring. Scalability doesn’t mean you need to reduce cost numbers. It unlocks new applications.”

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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