Vitalik: People Still ‘Underestimating’ Superiority of Crypto Payments
Ethereum co-founder Vitalik Buterin suggests that cryptocurrency’s superiority for payments is often “underestimated” over fiat, pointing to the convenience of international payments and payments to charities as key examples .
Buterin made the comments in a Twitter thread on August 24, explaining that it is not only censorship resistance, but also convenience that makes cryptocurrencies “superior” when it comes to international trade, charity, and even payments within countries.
People continue to underestimate how often cryptocurrency payments are superior, not even because of censorship resistance, but simply because they are so much more convenient.
A big boost for international business and charity, and sometimes even payments within countries.
— vitalik.eth (@VitalikButerin) August 24, 2022
Adoption of cryptocurrency in payments has increased globally. A report by data platform PYMNTS titled “Paying With Cryptocurrency” in July found that among companies surveyed with annual revenue over $1 billion, 85% said they embrace crypto payments to find and earn new customers.
The availability of crypto debit cards has also grown rapidly, with Binance recently partnering with Mastercard to announce a prepaid card for Argentinians. Many of these cards, such as Wirex’seven reward users with crypto cashback for paying by card and make it easier to spend several major cryptocurrencies, fiat currencies, as well as withdraw cash from ATMs.
As Vitalik points out, cryptocurrencies are also particularly useful when transferring money internationally and for charitable donations. Traditionally, when made in fiat currency, international payments can take a long time to process and incur significant fees. The war in Ukraine is an excellent example of his usefulness in this regard, with Deputy Prime Minister Mykhailo Fedorov having tweeted on August 18, $54 million was raised by the sole activist and non-profit group Aid For Ukraine.
However, not everyone has been so optimistic about using crypto as a form of payment, with common objections including price volatility, ease of use and regulatory risk, as well as fees. high transaction fees and long processing times for some cryptocurrencies, such as Bitcoin and Ethereum.
Although it may vary, the Bitcoin blockchain is handling around five transactions per second (TPS) and average fees of $0.819 as of August 24, while Ethereum is currently handling approximately 29.3 GST with an average fee of $1.57. Visa, on the other hand, claims to be able to process 24,000 transactions per second and charges between 1.4 and 2.5% per transaction.
Related: Ukraine Showed the Value of Cryptocurrency Offerings to Real People
The development of the Lightning Network, a layer 2 solution built on top of Bitcoin’s blockchain, could be a solution for Bitcoin’s lagging TPS, while Ethereum has looked into layer 2 deployment technology, such as ZK-rollups to significantly reduce costs and processing times.
Stablecoins, cryptocurrencies designed to be pegged to another asset (like the US dollar), have also become a popular medium of exchange, especially in emerging economies.
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