Blockchain transaction fees could go down to $0.02, says Vitalik Buterin
Create 2 Scaling solutions
Buterin, who believes the long-awaited Ethereum software Merge upgrade will make cryptocurrency payments more mainstream and accessible to a wider user base, has expressed that transaction costs “could go down to $0.05, or maybe as low as $0.02”.
He attributes this to “the solid work that’s happening” with rollups like Optimism’s Layer 2 scaling solution for Ethereum (ETH), where transactions are aggregated and compressed off-chain before being verified at the consensus layer. More specifically, Optimism helps users save on gas fees by rolling up batches of transactions and settling them on another blockchain using advanced data compression techniques – with receipts fed back to main Ethereum blockchain.
Overall, introducing zero-byte compression can reduce the size and cost of data in blockchain transactions since the number of possible transactions that can be performed increases.
According to Buterin, rollups today typically charge “somewhere between $0.25 and sometimes $0.10,” and in the future rollups that offer improved efficiency will lead to “cheaper and much more affordable” transaction fees.
Crypto payment use cases
Buterin also touched on Bitcoin (BTC), stating that the original use case was to provide a “peer-to-peer electronic cash system” that was cheaper than traditional payment methods. However, this was no longer the case in 2018, as he believes this was when adoption accelerated and blockchain transactions became too expensive.
In the co-founder’s view, BTC and other assets will soon be able to offer this use case again as scaling solutions gradually reduce costs to fractions of a cent.
According to Buterin, there are several different areas that will benefit from cheap crypto transaction rates. These include “lower income countries or places” where the existing economic system is “not very efficient”, Domain Name System (DNS) servers and Web3 account management services.
In particular, lower transaction fees can improve financial mobility since it gives people access to important payment structures over the internet. Buterin added:
“You actually have to send a transaction to create a DNS name, you actually have to send a transaction to restore your account, you actually have to send a transaction to fulfill any of these customizations. If each of these operations costs like $11, then people don’t go into it.”
Ultimately, scalability is at the forefront of blockchain research and development, and Buterin highlighted how it can enable and unlock entirely new classes of applications while maintaining on-chain compatibility between smart contracts.
This comes as new data shows that Ethereum gas fees have recorded their lowest prices since 2020. In fact, Ethereum network fees recently fell to 0.00086 ETH or $1.46 per transfer, a low not seen since December 2020.
