Vitalik thinks the superiority of crypto payments is still "underrated" by people

By: Ikenna Odunze

August 26, 2022 10:18 AM

The co-founder of Ethereum suggests that cryptocurrency payments are a "big boost" to payments within countries, Charity, and international business. 

Ethereum co-founder Vitalik Buterin suggests that the superiority of cryptocurrencies for payments compared to fiat is often "understated," citing the convenience of international payments and charity payments as key examples.

On August 24, Buterin made the remarks in a Twitter thread, explaining that it's not just resistance to censorship, but convenience that makes cryptocurrencies "superior" when it's about international business. charity, even international payments.

The acceptance of cryptocurrencies in payment transactions has increased worldwide. A July report by data platform PYMNTS entitled "Paying with Cryptocurrencies" found that 85% of surveyed companies with annual sales of more than 1 billion new customers.

The availability of crypto debit cards has also been growing rapidly, and Binance recently partnered with Mastercard to announce a prepaid card for Argentina. Many of these cards, like Wirex, even reward users with crypto discounts for card payments, making it easy to spend several major cryptocurrencies and fiat currencies, as well as withdraw cash from ATMs.

As Vitalik pointed out, cryptocurrencies are also particularly useful for international money transfers and charitable donations. Traditionally, international payments, when made with fiat currency, can take a long time and incur high fees. The war in Ukraine is a great example of its usefulness in this regard, as Deputy Prime Minister Mykhailo Fedorov tweeted on August 18 that only the non-profit and activist group, Aid For Ukraine, 54 million raised US dollars.

However, not everyone has been so optimistic about using cryptocurrencies as a means of payment, with common objections such as price volatility, ease of use and regulatory risk, as well as transfer fees, high transaction and long processing times for certain cryptocurrencies such as Bitcoin and Ethereum.

While it can vary, the Bitcoin blockchain processes around five transactions per second (TPS) and average fees of $0.819 (as of August 24), while Ethereum currently has around 29.3 TPS and average fees 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.

The development of the Lightning Network, a Layer 2 solution built on top of the Bitcoin blockchain, could be a solution for Bitcoin's delayed TPS, while Ethereum move to Layer 2 Rollup technology seeks, like ZK-Rollups, to significantly reduce fees and processing times.

Stablecoins, cryptocurrencies designed to be pegged to another asset (like the US dollar), have also become a popular medium of exchange, particularly in emerging markets.