People still “underestimate” the superiority of crypto payments
Ethereum co-founder Vitalik Buterin suggests that the superiority of cryptocurrency for payments is often “underrated” compared to fiat, pointing to the convenience of international payments and payments to charities as key examples.
Buterin made the comments in a Twitter thread on August 24, explains that it’s not just censorship resistance but convenience that makes cryptocurrencies “superior” when it comes to international business, charity and even domestic payments.
People continue to underestimate how often cryptocurrency payments are superior, not even because of censorship resistance, but simply because they are so much more convenient.
Big boost to international business and charity, and sometimes even payments within countries.
— vitalik.eth (@VitalikButerin) 24 August 2022
Cryptocurrency adoption in payments has grown globally. A report by the data platform PYMNTS entitled “Paying with Cryptocurrency” in July found that among companies surveyed with an annual revenue of more than $1 billion, 85% said they use crypto payments to find and acquire new customers.
The availability of crypto debit cards has also grown rapidly, with Binance recently partnering with Mastercard to announce a prepaid card for Argentines. Many of these cards, such as Wirex’s, even reward users with crypto cashback for paying through the card and facilitate the use of several major cryptocurrencies, fiat currencies, as well as ATM cash withdrawals.
As Vitalik pointed out, cryptocurrencies are also particularly useful when transferring money internationally and for charitable donations. Traditionally when done with fiat currency, international payments can take a long time to process and result in large fees. The war in Ukraine is a good example of its usefulness in this regard, with Deputy Prime Minister Mykhailo Fedorov having tweeted August 18 that $54 million was raised by the non-profit organization and activist group Aid For Ukraine alone.
However, not everyone has been equally positive about crypto’s use as means of payment, with common objections including price volatility, ease of use and regulatory risk, as well as high transaction fees and long processing times for certain cryptocurrencies, such as Bitcoin and Ethereum.
Although it may vary, the Bitcoin blockchain handles about five transactions per second (TPS), and has average fees of $0.819 as of August 24, while Ethereum currently handles around 29.3 TPS with average fees of $1.57. Visa, on the other hand, claims to be able to handle 24,000 transactions per second and charges between 1.4 and 2.5% per transaction.
Related: Ukraine has shown the value cryptocurrency offers to real people
The development of the lightning network, a layer 2 solution built on top of Bitcoin’s blockchain, could be a solution to Bitcoin’s lagging TPS, while Ethereum has looked to layer 2 roll-up technology such as ZK rollups to significantly reduce fees and processing times.
Stablecoins, cryptocurrencies designed to be pegged to another asset (such as the US dollar), have also become a popular medium of exchange, particularly in emerging economies.
