People underestimate the superiority of crypto payments, according to Ethereum co-founder Vitalik Buterin. He stated that the superiority of cryptocurrency for payments is sometimes “underrated” when compared to fiat, citing the ease of international payments and charitable donations as major examples.
Buterin made the remarks in a Twitter thread on August 24, noting that it’s not simply resistance to censorship that makes cryptocurrencies “better” when it comes to international commerce, charity, and even intra-country payments.
People continue to underrate how often cryptocurrency payments are superior not even because of censorship resistance but just because they’re so much more convenient.
Big boost to international business and charity, and sometimes even payments within countries.
— vitalik.eth (@VitalikButerin) August 24, 2022
Globally, cryptocurrency popularity in payments is increasing. According to a July research from analytics platform PYMNTS titled “Paying With Cryptocurrency,” 85% of firms with yearly incomes surpassing $1 billion are using crypto payments to locate and attract new consumers.
Crypto debit cards are also becoming more widely available, with Binance recently working with Mastercard to provide a prepaid card for Argentinians. Many of these cards, such as Wirex’s, even reward users with crypto cashback for using the card and allow users to spend multiple major cryptocurrencies, fiat currencies, and withdraw cash from ATMs.
As Vitalik pointed out, cryptocurrencies are also particularly beneficial for international money transfers and charity gifts. International payments have traditionally taken a long time to process and resulted in high costs when done in fiat money. But still, people underestimate the superiority of crypto payments.
The war in Ukraine is a prime illustration of its utility in this area, with Vice Prime Minister Mykhailo Fedorov tweeting on Aug. 18 that the charity and activist group Aid For Ukraine alone had raised $54 million.
However, not everyone is as enthusiastic about the use of cryptocurrency as a form of payment, with frequent concerns including price volatility, simplicity of use, and regulatory risk, as well as hefty transaction fees and lengthy processing times for specific cryptocurrencies such as Bitcoin and Ethereum.
Whereas it varies, the Bitcoin network now handles about five transactions per second (TPS) with average costs of $0.819 as of August 24, while Ethereum currently manages about 29.3 TPS with average fees of $1.57. Visa, on the other hand, claims to be capable of processing 24,000 transactions per second and to charge between 1.4 and 2.5% for each transaction.
The development of the lightning network, a layer-2 solution built on top of Bitcoin’s blockchain, may be a solution for Bitcoin’s lagging TPS, but Ethereum has been looking at layer-2 roll-up technologies, such as ZK-rollups, to drastically cut costs and processing times.
Stablecoins, cryptocurrencies meant to be tied to another asset (such as the US dollar), have also grown in popularity, particularly in underdeveloped markets.
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