V God: People Still "Underestimate" the Superiority of Encrypted Payments

Ethereum co-founder Vitalik Buterin said the superiority of cryptocurrencies for payments compared to fiat is often "underestimated," citing the ease of international payments and charitable payments as key examples.

Buterin tweeted the remarks on Aug. 24, explaining that cryptocurrencies are not only censorship-resistant but also easy to use, giving them "an edge" when it comes to international commerce, philanthropy, and even domestic payments .

The adoption of cryptocurrencies in the world of payments has been growing. A July report by data platform PYMNTS titled “Paying with Cryptocurrencies” found that 85 percent of surveyed businesses with annual revenues of more than $1 billion said they were using cryptocurrency payments to find and acquire new customer.

The supply of crypto debit cards is also growing rapidly, with Binance recently partnering with Mastercard to announce the launch of a prepaid card for Argentines. Many of these cards, like Wirex’s, even offer cashback rewards in cryptocurrencies for payments made with the card, and facilitate spending in several major cryptocurrencies, fiat currencies, and cash withdrawals from ATMs.

As Vitalik pointed out, cryptocurrencies are also particularly useful for international transfers and charitable donations. Traditionally, international payments using fiat currencies can take a long time to process and incur significant fees. The war in Ukraine is a good example, Ukraine’s Deputy Prime Minister Mykhailo Fedorov tweeted on August 18, and the non-profit campaign group Aid For Ukraine alone has raised $54 million.

However, not everyone is bullish on the use of cryptocurrencies as a means of payment. Common objections include price volatility, ease of use, and regulatory risk, as well as the high transaction fees and long-term risks of certain cryptocurrencies, such as Bitcoin and Ethereum. processing time.

The Bitcoin blockchain processes roughly 5 transactions per second (TPS), with an average fee of $0.819 as of August 24, while Ethereum currently has about 29.3 TPS 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 1.4-2.5% per transaction.

The Lightning Network is a layer-2 solution built on the Bitcoin blockchain, and its development may be a solution to Bitcoin’s TPS lag, while Ethereum has been seeking layer-2 roll-up technologies such as ZK-rollup , to significantly reduce costs and processing times.

Stablecoins, a cryptocurrency pegged to another asset such as the U.S. dollar, have also become a popular medium of exchange, especially in emerging economies .