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

Ethereum co-founder Vitalik Buterin argues that cryptocurrency payments make sense again, as the Layer 2 rollup will soon reduce transaction costs by a factor of several. .

Quoting Buterin, the Cointelegraph team, which is currently attending Korea Blockchain Week (KBW), said that the final hurdle to shrinking large transactions by a fraction is the blockchain. It states that it is data compression.

He said there is “solid work to be done” on the rollup so far, including 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. It is being done,” he said.

“So with today’s rollups, transaction fees are generally between $0.25 and sometimes $0.10, and in the future there will be rollups with all the efficiency improvements I talked about. The transaction cost could be as low as $0.05, or even $0.02, much cheaper, more affordable, a complete game changer.

Despite functioning primarily as a speculative store of value, Buterin said the primary use case for Bitcoin (BTC) presented in the 2008 white paper was that it was used more than traditional payment methods. It emphasized that it was to provide an inexpensive “peer-to-peer electronic cash system.”

However, according to Buterin, that was the case until 2013, but that was no longer the case in 2018 as adoption increased and blockchain transactions became too expensive.

“I think it’s a bit of a forgotten vision. I think one of the reasons it’s been forgotten is because it’s basically been discounted off the market,” he said.

In the view of Ethereum co-founders, BTC and other assets will soon serve this use case again, as scaling solutions such as the Lightning Network in BTC’s case will gradually drive costs down to fractions of a cent. You will be able to.

Crypto payment use cases

Buterin outlined several areas where cheap cryptocurrency trading will be particularly important. First, he pointed to “low-income countries or places where the existing financial system is less effective.” This is because citizens will be able to access important payment structures via the Internet. This is already being adopted despite the cost of international transfers.

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Second, he notes that in the context of Ethereum, cheap crypto transactions can also help drive adoption for non-financial applications such as Domain Name System (DNS) servers, proof of attendance protocols, and Web3 account management services. pointed out.

“I had to actually submit a transaction to create a DNS name, I had to actually submit a transaction to recover my account, and I had to actually submit a transaction to satisfy some of these adaptations. You have to. If each of these operations cost something like $11, people aren’t into it.”

Scalability is not just about driving costs down and needing scalability and boring. I think it actually enables and unlocks a whole new class of applications, he added.