Buterin: Layer 2 scaling solutions will make crypto payments make sense again
Vitalik Buterine predicts Bitcoin transaction costs to go as low as the fraction of a cent with the new Lightning Network upgrade
By Shashank Bhardwaj
Image: Michael Ciaglo / GETTY IMAGES NORTH AMERICA / Getty Images via AFP
While attending Korea Blockchain Week (KBW), Ethereum co-founder Vitalik Buterin stated that blockchain data compression is the final barrier to scaling transactions to fractions of a cent. He also claims that crypto payments will once again 'make sense.' This will occur as a result of layer-2 rollups, which are expected to reduce transaction costs to fractions of a cent in the near future. According to him,
"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 also discussed the much-anticipated 'Merger.' Ethereum is undergoing continuous improvement. With this merger, Ethereum is ready to transition from the Proof-of-Work (PoW) mechanism to the Proof-of-Stake (PoS) mechanism. Buterin stated that there is currently "solid work happening" with rollups. Optimism's layer-2 scaling solution for Ethereum is included in the rollups. By rolling up batches of transactions and settling them on another blockchain using advanced data compression techniques, Optimism helps users save on gas fees. The task was completed successfully on Ethereum by implementing zero byte compression.
This is expected to improve Ethereum's expandability and enable more people to make crypto payments in their daily lives. Buterin stated earlier this year that all Layer 2 transaction fees must be less than $0.05 to be 'truly acceptable,' emphasising the importance of affordability. The 'high transaction fees' of Ethereum have made headlines. Buterin, on the other hand, pointed to another leading crypto, Bitcoin, and noted that the key use case of Bitcoin (BTC) presented in its white paper from 2008 was to provide a 'peer-to-peer electronic cash system.' The Bitcoin system was designed to be less expensive than traditional payment methods. Even though Bitcoin kept its promise until 2013, the picture had changed by 2018. As Bitcoin adoption grew in 2018, blockchain transactions became 'too expensive.'
"It’s a vision that has been, I think, forgotten a little bit, and I think one of the reasons why it has been forgotten is basically because it got priced out of the market," he said in a statement.
However, Buterin is optimistic about the Lightning Network, which Bitcoin is implementing as a scaling solution. He believes that with such scaling solutions, crypto transaction costs will be reduced to fractions of a cent. This will aid in expanding the use cases for Bitcoin and other crypto assets. While talking about scalability, he was quoted saying, "Scalability isn’t just like some boring thing where you just need like cost numbers go down scalability, I think actually enables and unlocks entirely new classes of applications."
Shashank is founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
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